-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AnR0GGMFuVlltJ548lUFMSpr3TRt9GLSxIyM1VVvdvGRXFK6Vkj6CqAlolKXfZOE 8ctfT72M7PrEhZWmckLprQ== 0000950117-02-002800.txt : 20021120 0000950117-02-002800.hdr.sgml : 20021120 20021120171406 ACCESSION NUMBER: 0000950117-02-002800 CONFORMED SUBMISSION TYPE: N-2/A PUBLIC DOCUMENT COUNT: 33 FILED AS OF DATE: 20021120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOULDER GROWTH & INCOME FUND CENTRAL INDEX KEY: 0000102426 IRS NUMBER: 132729672 STATE OF INCORPORATION: MD FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-2/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-02328 FILM NUMBER: 02835191 BUSINESS ADDRESS: STREET 1: 1680 38TH STREET STREET 2: SUITE 800 CITY: BOULDER STATE: CO ZIP: 80301 BUSINESS PHONE: 3034445483 MAIL ADDRESS: STREET 1: 1680 38TH STREET STREET 2: SUITE 800 CITY: BOULDER STATE: CO ZIP: 80301 FORMER COMPANY: FORMER CONFORMED NAME: USLIFE INCOME FUND INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOULDER GROWTH & INCOME FUND CENTRAL INDEX KEY: 0000102426 IRS NUMBER: 132729672 STATE OF INCORPORATION: MD FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-2/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-100634 FILM NUMBER: 02835192 BUSINESS ADDRESS: STREET 1: 1680 38TH STREET STREET 2: SUITE 800 CITY: BOULDER STATE: CO ZIP: 80301 BUSINESS PHONE: 3034445483 MAIL ADDRESS: STREET 1: 1680 38TH STREET STREET 2: SUITE 800 CITY: BOULDER STATE: CO ZIP: 80301 FORMER COMPANY: FORMER CONFORMED NAME: USLIFE INCOME FUND INC DATE OF NAME CHANGE: 19920703 N-2/A 1 a33563.txt BOULDER GROWTH & INCOME FUND As filed with the Securities and Exchange Commission on November 20, 2002 Securities Act Registration No. 333-100634 Investment Company Registration No. 811-7390 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X] Pre-Effective Amendment No. 1 [X] Post-Effective Amendment No. ___ and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X] AMENDMENT NO. 8 [X] Boulder Growth & Income Fund, Inc. (Exact Name of Registrant as Specified In Charter) 1680 38th Street, Suite 800 Boulder, Colorado 80301 (Address of Principal Executive Offices) (303) 444-5483 (Registrant's Telephone Number, including Area Code) Stephen C. Miller 1680 38th Street, Suite 800 Boulder, Colorado 80301 (Name and Address of Agent for Service) Copies to: Rose F. DiMartino, Esq. Willkie Farr and Gallagher 787 Seventh Avenue New York, NY 10019-6099 APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after the effective date of this Registration Statement. If any securities being registered on this form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, other than securities offered in connection with a dividend reinvestment plan, check the following box. [X] It is proposed that the filing will become effective when declared effective pursuant to Section 8(c). [x] This amendment designates a new effective date for a previously filed registration statement. [ ] This Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act and the Securities Act registration statement number of the earlier effective registration statement for the same offering is ___________________. [ ] CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
============================================================================================================================= Proposed Proposed Title of Securities Amount of Maximum Offering Maximum Aggregate Being Registered Amount Being Registration Fee Registered Price per Unit Offering Price (1) (2) - ----------------------------------------------------------------------------------------------------------------------------- Shares of Common Stock, par value $.01 per share... 5,663,892 shares $5.15 $29,169,043.00 $2,683.55 - -----------------------------------------------------------------------------------------------------------------------------
(1) As calculated pursuant to Rule 457(c) under the Securities Act of 1933, as amended. Based on the average closing sales prices reported on the New York Stock Exchange during the 5-day period ending on October 17, 2002. (2) Previously paid. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. 2 BOULDER GROWTH & INCOME FUND, INC. Form N2 CROSS REFERENCE SHEET Parts A and B of Prospectus
Item Caption Location in Prospectus - ---- ------- ---------------------- Item 1. Outside Front Cover...................................... Front Cover Page Item 2. Inside Front and Outside Back Cover Page................. Front Cover Page Item 3. Fee Table and Synopsis................................... Prospectus Summary and Fee Table Item 4. Financial Highlights..................................... Financial Highlights Item 5. Plan of Distribution..................................... Not Applicable Item 6. Selling Shareholders..................................... Not Applicable Item 7. Use of Proceeds.......................................... Use of Proceeds; Investment Objective and Policies Item 8. General Description of the Registrant.................... Cover Page; Prospectus Summary; The Fund; Risk Factors and Special Considerations; Capital Stock and Other Securities; Investment Objective and Policies Item 9. Management............................................... Prospectus Summary; Management of the Fund; Portfolio Transactions; Custodians and Transfer Agency; Item 10. Capital Stock, Long-Term Debt, and Other Securities..... The Offer; Capital Stock and Other Securities; Dividends and Distributions; Automatic Dividend Reinvestment and Voluntary Cash Purchase Plan; Taxation Item 11. Defaults and Arrears on Senior Securities................ Not Applicable Item 12. Legal Proceedings........................................ Not Applicable Item 13. Table of Contents of the Statement of Additional Information.............................................. Table of Contents of the Statement of Additional Information
3 Item 14. Cover Page.............................................. Front Cover Page Item 15. Table of Contents....................................... Front Cover Page Item 16. General Information and History......................... Not Applicable Item 17. Investment Objective and Policies....................... Investment Objective and Policies; Investment Policies and Techniques; Investment Restrictions Item 18. Management.............................................. Management of the Fund Item 19. Control Persons and Principal Holders of Securities..... Management of the Fund Item 20. Investment Advisory and Other Services.................. Management of the Fund Item 21. Brokerage Allocation and Other Practices................ Portfolio Transactions Item 22. Tax Status.............................................. Taxation Item 23. Financial Statements.................................... Financial Statements
Part C-Other Information Information required to be included in Part C is set forth under the appropriate item, so numbered, in Part C to this Registration Statement. 4 The information in this Prospectus is not complete and may be changed. A registration statement relating to the Securities has been filed with the Securities and Exchange Commission. We may not sell these securities until this registration statement is effective. This Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer, solicitation or sale is not permitted. SUBJECT TO COMPLETION, DATED NOVEMBER 20, 2002 PROSPECTUS 5,663,892 RIGHTS FOR 5,663,892 SHARES BOULDER GROWTH & INCOME FUND, INC. Common Stock The Boulder Growth & Income Fund, Inc. (the "Fund") is issuing transferable rights ("Rights") to its shareholders. These Rights will allow you to subscribe for new shares of common stock of the Fund (the "Common Stock"). For every one Right you receive, you will be entitled to buy one new share of the Common Stock. You will receive one Right for each outstanding Fund share you own on November 29, 2002 (the "Record Date"). The number of Rights to be issued to a shareholder on the Record Date will be rounded down to the nearest whole number of Rights in cases where shareholders own fractional shares. Also, shareholders on the Record Date may purchase shares not acquired by other shareholders in this Rights Offering (the "Offering"), subject to limitations discussed in this Prospectus. The Rights are transferable and will be listed for trading on the New York Stock Exchange ("NYSE") under the symbol "BIF RT". The Fund's shares of Common Stock are also listed, and the shares issued pursuant to this Offering will be listed, on the NYSE under the symbol "BIF." On November 15, 2002, the last reported net asset value per share of the Fund's shares was $6.32 and the last reported sales price of a share on the NYSE was $5.35. The subscription price per share (the "Subscription Price") will be 95% of the lesser of (a) the NAV on the date of the expiration of the Offering (the "Pricing Date"), or (b) the average volume-weighted closing sales price of a share on the NYSE on the Pricing Date and the four immediately preceding trading days. SHAREHOLDERS WHO CHOOSE TO EXERCISE THEIR RIGHTS WILL NOT KNOW THE SUBSCRIPTION PRICE PER SHARE AT THE TIME THEY EXERCISE SUCH RIGHTS SINCE THE CLOSE OF THE OFFERING ON THE EXPIRATION DATE IS PRIOR TO THE AVAILABILITY OF THE FUND'S NAV AND OTHER RELEVANT MARKET INFORMATION ON THE PRICING DATE. ONCE YOU SUBSCRIBE FOR YOUR SHARES AND THE FUND RECEIVES PAYMENT OR GUARANTEE OF PAYMENT, YOU WILL NOT BE ABLE TO CHANGE YOUR DECISION. THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON DECEMBER 20, 2002 (THE "EXPIRATION DATE"), UNLESS THE OFFERING IS EXTENDED AS DISCUSSED IN THIS PROSPECTUS. For more information, please call Georgeson Shareholder Communications Inc. (the "Information Agent") toll free at 1-800-732-6518. Boulder Growth & Income Fund, Inc. is a closed-end, non-diversified management investment company. The Fund's investment objective is total return. The Fund seeks to produce both long-term capital appreciation through investment in common stocks and income from both dividend paying common stocks and fixed income securities. The Fund typically invests in common stocks of U.S.-based companies, although it is not limited to investing in the U.S. stock market. Boulder Investment Advisers, LLC ("BIA") and Stewart Investment Advisers ("SIA") (collectively the "Advisers") act as the investment advisers to the Fund. The address of the Fund and BIA is 1680 38th Street, Suite 800, Boulder, Colorado 80301. SIA, whose legal name is Stewart West Indies Trading Company, Ltd., resides at Bellerive, Queen Street, St. Peter, Barbados. An investment in the Fund is not appropriate for all investors. No assurances can be given that the Fund's objective will be achieved. FOR A DISCUSSION OF CERTAIN RISK FACTORS AND SPECIAL CONSIDERATIONS WITH RESPECT TO OWNING SHARES OF THE FUND, SEE "RISK FACTORS AND SPECIAL CONSIDERATIONS" ON PAGE 7 OF THIS PROSPECTUS. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. aNY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
==================================================================================================================== Estimated Subscription Price Estimated Sales Load Estimated Proceeds to the Fund(2) ==================================================================================================================== Per Share $5.09(1) None $28,611,313 Total $5.09 None $28,611,313 ====================================================================================================================
(1) Since the Subscription Price will not be determined until after printing and distribution of this Prospectus, the Subscription Price above is estimated based on the closing price of a Share on November 15, 2002 and applying the pricing formula set forth on the Cover Page and described below under "Subscription Price" (i.e., 95% of the lesser of (a) the NAV on November 15, 2002 or (b) the average volume-weighted closing sales price of the Fund's shares on the NYSE on November 15, 2002, and the four preceding trading days) (the "Estimated Subscription Price"). The average volume-weighted closing sales price of the Fund's shares on November 15, 2002 was $5.36 per share. See "Subscription Price" and "Payment For Shares" below. 2) Proceeds to the Fund before deduction of expenses incurred by the Fund in connection with the Offering which are estimated to be $229,225. Funds received by check prior to the final due date of this Offer will be deposited in a segregated interest-bearing account pending allocation and distribution of shares. Interest on subscription monies will be paid to the Fund regardless of whether shares are issued by the Fund. Shareholders who do not exercise their Rights should expect that they will, at the completion of the Offering, own a smaller proportional interest in the Fund than if they exercised their Rights. As a result of the Offering you will experience an immediate dilution, which could 1 be substantial, of the aggregate net asset value of your shares. This is because the Subscription Price per share and/or the net proceeds to the Fund for each new share sold are likely to be less than the Fund's net asset value per share on the Expiration Date. The Fund cannot state precisely the extent of this dilution at this time because the Fund does not know what the net asset value or market value per share will be when the Offering expires or what proportion of the Rights will be exercised. The Ernest Horejsi Trust No. 1B, which holds 20.68% of the Fund's common stock, and certain other persons affiliated with the Fund and the Advisers (collectively referred to herein as the "Horejsi Affiliates" and more specifically described on Page 10 of this Prospectus and in the Statement of Additional Information), may be deemed to control the Fund and may purchase shares in the Offering through the primary subscription and the over-subscription privilege in such manner and on the same terms as other shareholders. This Prospectus sets forth concisely certain information about the Fund that a prospective investor should know before investing. Investors are advised to read and retain it for future reference. A Statement of Additional Information dated November 20, 2002 (the "SAI") containing additional information about the Fund has been filed with the SEC and is incorporated by reference in its entirety into this Prospectus. A copy of the SAI, the table of contents of which appears on Page 29 of this Prospectus, may be obtained without charge by contacting the Fund's Sub-Administrator (PFPC, Inc.) at (800) 331-1710. The SAI will be sent within two business days of receipt of a request. All other shareholder inquiries should be directed to Georgeson Shareholder, the Fund's Information Agent, at 1-800-732-6518. TABLE OF CONTENTS PROSPECTUS SUMMARY 2 PURPOSE AND SUMMARY OF THE OFFERING 2 BOARD CONSIDERATIONS; SHAREHOLDER APPROVED RIGHTS OFFERING 2 IMPORTANT TERMS OF THE OFFERING 3 IMPORTANT DATES FOR THE OFFERING 4 KEY ELEMENTS OF THE OFFERING 5 INFORMATION REGARDING THE FUND 7 RISK FACTORS AND SPECIAL CONSIDERATIONS 7 DILUTION 7 DISCOUNT FROM NET ASSET VALUE 7 REPURCHASE AND CHARTER PROVISIONS 8 NON-DIVERSIFIED STATUS 8 INDUSTRY RISKS AND RISKS ASSOCIATED WITH THE FUND'S INVESTMENTS 8 FOREIGN SECURITIES 8 DEPENDENCE ON KEY PERSONNEL 8 SIZE OF FUND 8 LEVERAGING 8 FEE TABLE 9 SHAREHOLDER TRANSACTION EXPENSES 9 ANNUAL FUND EXPENSES 9 FINANCIAL HIGHLIGHTS 9 THE OFFERING 10 TERMS OF THE OFFERING 10 PURPOSE OF THE OFFERING 11 REASONS FOR CONDUCTING THE OFFERING 11 THE SUBSCRIPTION PRICE 13 OVER-SUBSCRIPTION PRIVILEGE 13 EXPIRATION OF THE OFFERING 13 SALES BY SUBSCRIPTION AGENT 13 METHOD OF TRANSFERRING RIGHTS 13 METHOD OF EXERCISING RIGHTS 14 SUBSCRIPTION AGENT 14 PAYMENT FOR SHARES 14 DELIVERY OF STOCK CERTIFICATES 16 FOREIGN RESTRICTIONS 16 EMPLOYEE PLAN CONSIDERATIONS 18 INFORMATION ABOUT THE FUND 18 THE FUND 18 MANAGEMENT OF THE FUND 18 BOARD OF DIRECTORS 18 INFORMATION REGARDING THE ADVISERS AND ADMINISTRATOR 18 BOULDER INVESTMENT ADVISERS, LLC 19 STEWART INVESTMENT ADVISERS 19 PORTFOLIO MANAGERS 19 FUND ADMINISTRATIVE SERVICES, LLC 19 THE INVESTMENT CO-ADVISORY AGREEMENTS 19 ADMINISTRATION AGREEMENT 20 USE OF PROCEEDS 20 INVESTMENT OPPORTUNITIES 20 BENEFIT TO THE ADVISERS AND ADMINISTRATOR 21 EXPENSES OF THE FUND 21 MARKET PRICE AND NET ASSET VALUE INFORMATION 21 INVESTMENT OBJECTIVE AND POLICIES 22 INVESTMENT OBJECTIVE 22 INVESTMENT POLICIES 22 OTHER INVESTMENT TECHNIQUES 23 RISKS ASSOCIATED WITH THE FUND'S INVESTMENTS 23 INVESTMENTS IN COMMON STOCKS 23 INVESTMENTS IN REAL ESTATE INVESTMENT TRUSTS 23 INVESTMENTS IN OTHER REGISTERED INVESTMENT COMPANIES 23 INVESTMENTS IN BONDS 23 INVESTMENT PHILOSOPHY 24 COMMON STOCKS 24 CASH AND CASH EQUIVALENTS 24 FIXED INCOME INVESTMENTS 24 DIVIDENDS AND DISTRIBUTIONS 24 DIVIDEND REINVESTMENT PLAN 25 TAXATION OF THE FUND 25 TAXATION OF SHAREHOLDERS 26 STATE AND LOCAL TAX MATTERS 26 DETERMINATION OF NET ASSET VALUE 26 REPURCHASE OF COMMON SHARES 27 CAPITALIZATION 27 RIGHTS WITH REGARD TO DIVIDENDS, VOTING AND LIQUIDATION 27 COMMON STOCK 27 PREFERRED STOCK 27 ANTI-TAKEOVER PROVISIONS OF THE CHARTER AND BY-LAWS 27 OTHER SERVICE PROVIDERS 28 CUSTODIAN 28 TRANSFER AGENT 28 INDEPENDENT ACCOUNTANTS 28 LEGAL MATTERS 28 REPORTS TO SHAREHOLDERS 28 AVAILABLE INFORMATION 28 STATEMENT OF ADDITIONAL INFORMATION 29 STATEMENT OF ADDITIONAL INFORMATION - TABLE OF CONTENTS 29 SIGNATURES 29 2 PROSPECTUS SUMMARY This summary highlights some information that is described more fully elsewhere in this Prospectus. It may not contain all of the information that is important to you. To understand the Offering fully, you should read the entire document carefully, including the risk factors. PURPOSE AND SUMMARY OF THE OFFERING. The Board of Directors of the Fund (the "Board") has determined that it would be in the best interests of the Fund and its existing shareholders to increase the assets of the Fund so that the Fund may be in a better position to take advantage of investment opportunities that may arise. In addition, the Board believes that increasing the size of the Fund may lower the Fund's expenses as a proportion of average net assets because the Fund's fixed costs would be spread over a larger asset base. There can be no assurance that by increasing the size of the Fund, the Fund's expense ratio will be lowered. The Board also believes that a larger number of outstanding shares and a larger number of beneficial owners of shares could increase the level of market interest in and visibility of the Fund and improve the trading liquidity of the Fund's shares on the NYSE. The Offering seeks to reward existing shareholders by giving them the right to purchase additional shares at a price below market and/or net asset value without incurring any commission or other transaction charges. The distribution to shareholders of transferable rights, which themselves may have intrinsic value, will also afford non-subscribing shareholders the potential of receiving a cash payment upon sale of such rights, receipt of which may be viewed as partial compensation for the possible dilution of their interests in the Fund. See "Reasons for Conducting The Offering" below. At a meeting on July 22, 2002, the Board recommended that shareholders approve a transferable rights offering (the "Offering"), the substantive terms of which would permit shareholders to acquire one new share of the Fund for each share held (i.e., a one-for-one rights offering) for a subscription price equal to 95% of the lesser of net asset value ("NAV") or the volume-weighted average market price on the expiration date of the Offering and the four immediately preceding trading days. BOARD CONSIDERATIONS; SHAREHOLDER APPROVED RIGHTS OFFERING. On April 26, 2002, at a regularly scheduled meeting of the Board, Management recommended that the Board consider conducting a rights offering and distributed extensive materials regarding an overview of rights offerings as well as the legal, practical and financial issues that the Board must consider in coming to a decision to approve a rights offering or to recommend such a proposal to shareholders. At this meeting, although the Board considered the viability of a rights offering for the Fund in general terms, it nonetheless resolved to have Management supplement and expand its analysis and present a formal and more detailed proposal for a rights offering at the next regularly scheduled meeting. At the April meeting, the independent members of the Board (the "Independent Directors") also resolved to engage an independent and disinterested consultant to advise the Board, and particularly the Independent Directors, on the viability and appropriateness of a rights offering for the Fund. After the April meeting, the Independent Directors interviewed qualified financial consultants with experience in the closed-end fund industry and, after unanimous agreement among the Independent Directors, selected and engaged Thomas J. Herzfeld, Inc. ("Herzfeld"), an organization recognized as an expert in the field of closed-end investment companies, to prepare an extensive analysis of rights offerings and their viability and appropriateness vis-a-vis the Fund. At the Board's regularly scheduled meeting in July 2002, Management provided additional requested analysis and a formal proposal for the Offering. At the request of counsel for the Independent Directors, Management provided additional requested research, analysis and background material regarding the proposed Offering. Prior to the July meeting, representatives of Herzfeld presented to the Board and Management a written analysis of rights offerings and specific recommendations regarding the proposed Offering. Representatives of Herzfeld also attended the July meeting and made an oral presentation of their materials, entertained questions from the Board, Management, the Advisers, the Fund's counsel and counsel for the Independent Directors, and met privately with the Independent Directors, their counsel and the Fund's counsel to discuss the Offering. In summary, Herzfeld advised the Board that in its view a "well-structured and well-timed rights offering can be a good way for BIF to raise capital at this time, if this additional capital will allow the Fund to take advantage of investment opportunities, reduce expenses, (emphasis added) and in general help the Fund achieve its particular long-term investment objectives." Following those discussions, and based on recommendations from Herzfeld, the Board, including all of the Independent Directors, determined that the pricing of the Offering should be 95% (rather than the 90% recommended by Fund Management) of the lower of NAV or market price, taking into account the lower dilution likely to result from the higher price and historical information supplied by Herzfeld supporting a conclusion that the higher price should not jeopardize the success of the Offering. The Board then determined to submit the Offering to shareholders for approval at the annual meeting of the Fund scheduled for October 1, 2002. Under the Investment Company Act of 1940 (the "1940 Act"), because the Offering would be at an exchange ratio of one-share-for-each-right-issued, a ratio that is higher than most rights offerings by other investment companies (e.g., one-share-for-three-rights-issued), the Offering would require approval by a "majority of the shareholders" (i.e., a per capita majority or "head-count" majority) which contrasts with the typical voting requirement of a "majority of 2 the shares". In a "head-count" majority, each shareholder, regardless of the shares held, counts as one vote. In addition to the required "head-count" vote, the Board voluntarily imposed an additional voting requirement that the Offering also be approved by an "absolute majority of the outstanding shares" (i.e., 50% of the outstanding shares would also have to support the Offering). Finally, the Independent Directors conditioned their approval of the Offering on (1) the Advisers agreeing to waive one-half of any advisory fees which would be charged against the uninvested proceeds from the Offering until such time as 50% or more of the proceeds have been invested in common stock equities in accordance with the Fund's investment objective and (2) the Fund's administrator agreeing to cap the Fund's expense ratio for the one-year period following the Offering at the level in effect on the expiration of the Offering, excluding extraordinary expenses. The Advisers and the Fund's administrator have agreed to both of these conditions. In determining to recommend a one-for-one rights offering to shareholders, the Board considered, among other things, the costs of doing a smaller offering (e.g., one-for-three) in relation to the costs of a one-for-one offering, the reduced impact of a smaller offering on the Fund's expense ratio, the current favorable climate for investing the proceeds of a larger offering and the increased potential for a second rights offering to enhance the ongoing viability of the Fund should a smaller amount of assets be raised. On September 3, 2002, subject to the voting requirements and conditions mentioned above, the Fund issued its Annual Proxy recommending, among other things, that shareholders approve the Offering. As the Fund has experienced in the past, shareholder participation in the proxy process has been generally low and thus additional solicitation of shareholder support of the Offering was required, especially in light of the relatively short solicitation period. On the meeting date, October 1, 2002, the Offering had received the requisite absolute majority (54.36% of outstanding shares) and had received overwhelming support of those shares voting (e.g., 81%). Nonetheless, the proposal fell short of the requisite per capita or head-count vote (e.g., 50%-plus-one). Consequently, shareholders present at the meeting resolved to adjourn with respect to the proposed Offering until such time as the requisite head-count could be achieved. At a reconvened meeting held on October 15, 2002, shareholders approved the Offering, the substantive terms of which would permit shareholders to acquire one new share of the Fund for each share held (i.e., a one-for-one rights offering) for a subscription price equal to 95% of the lesser of (a) the NAV on the date of the expiration of the Offering or (b) the average volume-weighted closing sales price of the Fund's shares on the NYSE on the date of the expiration of the Offering and the four preceding trading days. At this meeting, the Offering received supporting votes from 61.76% of the outstanding shares, 79.88% of the shares voting, and 50.44% of the shareholders (i.e., the per capita vote or head-count) and opposing votes from 12.4% of the outstanding shares, 16.0% of the shares voting and 17.2% of the shareholders. At the regularly scheduled Board meeting held on October 14, 2002, in anticipation that the required per-capita vote would be achieved, the Independent Directors asked Management whether, notwithstanding shareholder support of the Offering, market conditions and the Fund's economics had changed sufficiently to warrant either a delay or abandonment of the Offering. At this meeting Management offered additional data supporting the proposition that the Offering would reduce the Fund's expense ratio and that market conditions had changed (i.e., declined) in such a way as to present the Fund and its Advisers with more investment opportunities. Notwithstanding a decline in the Fund's NAV and consequently a reduction in the net proceeds expected to be raised in the Offering, the Board, including the unanimous support of the Independent Directors, resolved to approve and move forward with the Offering. Nonetheless, there can be no assurances that the Offering will be successful or that by increasing the shares of the Fund, its expense ratio will be reduced. Also at this meeting, the Board, including the unanimous approval by the Independent Directors, approved this Prospectus and the final terms of the Offering, subject to its being approved by shareholders. IMPORTANT TERMS OF THE OFFERING - -------------------------------------------------------------------------------- Total number of shares available for 5,663,892 primary subscription Number of Rights you will receive for each One Right for every one share('D') outstanding share you own on the Record Date Subscription Price 95% of the lesser of (a) the NAV on the Pricing Date or (b) the average volume-weighted closing sales price of the Fund's shares on the NYSE on the Pricing Date, and the four preceding trading days. Estimated Subscription Price $5.09
'D'The number of Rights to be issued to a shareholder on the Record Date will be rounded down to the nearest whole number of Rights. 3 IMPORTANT DATES FOR THE OFFERING - ----------------------------------------------------------------------------------- Record Date November 29, 2002 Subscription Period December 2, 2002 to December 20, 2002 Expiration Date and Pricing Date of the December 20, 2002'DD' Offering Deadline for delivery of Subscription December 20, 2002 Certificate and payment of shares, or Notice of Guaranteed Delivery (*) Deadline for payment pursuant to Notice December 26, 2002 of Guaranteed Delivery (*) Confirmation to participants December 29, 2002 Deadline for final payment for shares (if January 11, 2003 any)**
'DD' Unless the Offering is extended to a date no later than December 29, 2002. * Record Date Shareholders (defined below) exercising Rights must deliver to the Subscription Agent by the Expiration Date either (i) the Subscription Certificate together with the estimated payment or (ii) a Notice of Guaranteed Delivery. ** Since the actual Subscription Price due from subscribing shareholders (vis-a-vis the Estimated Subscription Price above) will not be determined until after printing and distribution of this Prospectus, additional monies may be owed by subscribers. 4
KEY ELEMENTS OF THE OFFERING - ----------------------------------------------------------------------------------------------------------------------------- o ONE-FOR-ONE OFFERING The Offering will give shareholders of record the "right" to purchase one new share of the Fund for each full share held. For example, if you own 100 shares on the announced record date, you will receive 100 Rights entitling you to purchase 100 new shares of the Fund. Shareholders will be able to exercise all or some of their Rights. However, shareholders who do not exercise all of their Rights will not be able to participate in the Over-Subscription Privilege. See "Over-Subscription Privilege" below. o TRANSFERABLE RIGHTS The Rights issued in the Offering will be "transferable", will be traded on the NYSE and will afford non-subscribing shareholders the option of selling their Rights on the NYSE or through the Subscription Agent. Selling the Rights allows a non-exercising shareholder (i.e., a shareholder who does not wish to purchase additional shares) the ability to offset some of the dilution which would otherwise occur. See discussion of "Dilution" below. In contrast, in a non-transferable rights offering (i.e., an offering where the rights cannot be traded), non-exercising shareholders would experience full dilution. There can be no assurance that a liquid trading market will develop for the Rights or that the price at which such Rights trade will approximate the amount of dilution otherwise realized by a non-exercising shareholder. The period during which Rights will trade will be limited and, upon expiration of the Offering, the Rights will cease to trade and will have no residual value. See "Sale of Rights" below). o SUBSCRIPTION PRICE Under the Offering, new shares will be sold at a price equal to 95% of the lesser of (a) the NAV on the expiration date of the Offering (the "Pricing Date") or (b) the volume-weighted average closing sales price of a share on the NYSE on the Pricing Date and the four immediately preceding trading days. Management believes that this pricing formula (versus a higher percentage discount or a pre-determined fixed price) will provide an incentive to shareholders (as well as others who might trade in the transferable Rights) to participate in the Offering. o OVER-SUBSCRIPTION PRIVILEGE If all of the Rights initially issued are not exercised by shareholders on the Record Date, any unsubscribed shares will be offered to other Record Date shareholders who have fully exercised the Rights initially issued to them and who wish to acquire additional shares. If shares are insufficient to honor all over-subscriptions, the available shares will be allocated pro-rata among those who over-subscribe based on the number of Rights originally issued to them. The Horejsi Affiliates may or may not exercise their Over-Subscription Privilege. If the Horejsi Affiliates fully exercise their Over-Subscription Privilege, under certain circumstances (e.g., low shareholder participation in the Offering, the trading of the Rights and the over-subscription privilege), the Horejsi Affiliates could substantially increase their percentage ownership in the Fund at an advantageous price. o METHOD FOR EXERCISING RIGHTS Except as described below, subscription certificates evidencing the Rights ("Subscription Certificates") will be sent to Record Date shareholders or their nominees. If you wish to exercise your Rights, you may do so in the following ways: 1. Complete and sign the Subscription Certificate. Enclose it in the envelope provided, together with payment in full and mail or deliver the envelope to Colbent Corporation (the "Subscription Agent") at the address indicated on the Subscription Certificate calculating the total payment on the basis of the Estimated Subscription Price of $5.09 per share (i.e., the estimated subscription price based on the Fund's NAV and market price on November 15, 2002). Your completed and signed Subscription Certificate and payment
5 must be received by the Expiration Date. A PAYMENT PURSUANT TO THIS METHOD MUST BE IN UNITED STATES DOLLARS BY MONEY ORDER OR CHECK DRAWN ON A BANK LOCATED IN THE UNITED STATES, MUST BE PAYABLE TO THE BOULDER GROWTH & INCOME FUND, INC. AND MUST ACCOMPANY AN EXECUTED SUBSCRIPTION CERTIFICATE FOR SUCH SUBSCRIPTION CERTIFICATE TO BE ACCEPTED. 2. Contact your broker, banker or trust company, which can arrange, on your behalf, to guarantee delivery of payment and delivery of a properly completed and executed Subscription Certificate pursuant to a notice of guaranteed delivery ("Notice of Guaranteed Delivery") by the close of business on the third business day after the Expiration Date. Your broker, banker or trust company may charge a fee for this service. The Notice of Guaranteed Delivery must be received by the Expiration Date. Rights holders will have no right to rescind a purchase after the Subscription Agent has received the Subscription Certificate or Notice of Guaranteed Delivery. See "The Offer - Method of Exercising Rights" and "The Offer - Payment for Shares." The Subscription Agent will deposit all checks received by it prior to the final due date into a segregated interest bearing account at Eastern Bank pending distribution of the shares from the Offering. All interest will accrue to the benefit of the Fund and investors will not earn interest on payments submitted. - ---------------------------------------------------------------------------------------------------------------------------- SHAREHOLDER INQUIRIES SHOULD BE DIRECTED TO GEORGESON SHAREHOLDER, THE FUND'S INFORMATION AGENT, AT 1-800-732-6518. - ---------------------------------------------------------------------------------------------------------------------------- o SALE OF RIGHTS The Rights are transferable until the Expiration Date and will be admitted for trading on the NYSE. Although no assurance can be given that a market for the Rights will develop, trading in the Rights on the NYSE will begin three Business Days prior to the Record Date and may be conducted until the close of trading on the last NYSE trading day prior to the Expiration Date. The value of the Rights, if any, will be reflected by the market price. Rights may be sold by individual holders or may be submitted to the Subscription Agent for sale. Any Rights submitted to the Subscription Agent for sale must be received by the Subscription Agent on or before December 19, 2002, one business day prior to the Expiration Date, due to normal settlement procedures. Trading of the Rights on the NYSE will be conducted on a when-issued basis until and including the date on which the Subscription Certificates are mailed to Record Date shareholders and thereafter will be conducted on a regular way basis until and including the last NYSE trading day prior to the Expiration Date. The shares will begin trading ex-Rights two Business Days prior to the Record Date. If the Subscription Agent receives Rights for sale in a timely manner, it will use its best efforts to sell the Rights on the NYSE. Any commissions will be paid by the selling Rights holders. Neither the Fund nor the Subscription Agent will be responsible if Rights cannot be sold and neither has guaranteed any minimum sales price for the Rights. For purposes of this Prospectus, a "Business Day" shall mean any day on which trading is conducted on the NYSE. - ---------------------------------------------------------------------------------------------------------------------------- Shareholders are urged to obtain a recent trading price for the Rights on the NYSE from their broker, bank, financial advisor or the financial press. - ---------------------------------------------------------------------------------------------------------------------------- o OFFERING FEES AND EXPENSES The Fund expects to incur approximately $229,225 of expenses in connection with the Offering. See "Fees and Expenses of The Offering" below. o RESTRICTIONS ON FOREIGN The Fund will not mail Subscription Certificates to shareholders whose record addresses are outside the United States or who have an APO or FPO
6 SHAREHOLDERS address. Shareholders whose addresses are outside the United States or who have an APO or FPO address and who wish to subscribe to the Offering either partially or in full should contact the Subscription Agent, by written instruction or recorded telephone conversation no later than three Business Days prior to the Expiration Date. If the Subscription Agent has received no instruction by such date, the Subscription Agent will attempt to sell all Rights and remit the net proceeds, if any, to such shareholders. If the Rights can be sold, sales of these Rights will be deemed to have been effected at the weighted average price received by the Subscription Agent on the day the Rights are sold, less any applicable brokerage commissions, taxes and other expenses. o USE OF PROCEEDS The net proceeds of the Offering are estimated to be approximately $28,611,313. This figure is based on the Estimated Subscription Price per share of $5.09 and assumes all shares offered are sold and that the expenses related to the Offering estimated at approximately $229,225 are paid. The Advisers anticipate that it will take approximately six months for the Fund to invest these proceeds in accordance with its investment objective and policies under current market conditions. Pending investment, the proceeds will be invested in certain short-term debt instruments. See "Use of Proceeds" below. o RISK FACTORS See "Risk Factors and Special Considerations" below.
INFORMATION REGARDING THE FUND Boulder Growth & Income Fund, Inc. is a non-diversified, closed-end management investment company. The Fund's investment objective is total return. The Fund seeks to produce both long-term capital appreciation through investment in common stocks and income from investments in both dividend paying common stocks and fixed income securities. The Fund typically invests in securities of U.S.-based companies. See "Investment Objective and Policies". No assurance can be given that the Fund's investment objective will be achieved. As of November 15, 2002, the Fund had 5,663,892 shares of Common Stock outstanding. The Fund's common shares are traded on the NYSE under the symbol "BIF." The average weekly trading volume of the Common Stock on the NYSE during the period from January 1, 2002 through September 30, 2002 was 9,700 shares. As of November 15, 2002, the net assets of the Fund were approximately $35,791,465. Also see "Management of the Fund" in the SAI. RISK FACTORS AND SPECIAL CONSIDERATIONS Following is a summary of some of the matters that you should consider before investing in the Fund through the Offering: DILUTION. Shareholders who do not exercise their Rights should expect that they will, at the completion of the Offering, own a smaller proportional interest in the Fund than if they exercised their Rights. As a result of the Offering you may experience an immediate dilution, which could be substantial, of the aggregate net asset value of your shares. This is because the Subscription Price per share and/or the net proceeds to the Fund for each new share sold are likely to be less than the Fund's net asset value per share on the Expiration Date. The Fund cannot state precisely the extent of this dilution at this time because the Fund does not know what the net asset value per share will be when the Offering expires or what proportion of the Rights will be exercised. For example, assuming that all Rights are exercised and the Subscription Price is $5.09, which is 95% of the lesser of the Fund's weighted-average closing sale price or its net asset value on November 15, 2002, the Fund's net asset value per share (after payment of solicitation fees and estimated offering expenses) would be $5.69, representing a reduction (dilution) of approximately $0.63 per share (or 10.04%). If you do not wish to exercise your Rights, you should consider selling these Rights as set forth in this Prospectus. Any cash you receive from selling your Rights will partially offset of any possible dilution of your interest in the Fund. The Fund cannot give any assurance, however, that a market for the Rights will develop or that the Rights will have any marketable value. DISCOUNT FROM NET ASSET VALUE. Shares of closed-end funds frequently trade at a market price that is less than the value of the net assets attributable to those shares (a "Discount"). The possibility that the Fund's shares will trade at a Discount from net asset value is a risk separate and distinct from the risk that the Fund's net asset value will decrease. The risk of purchasing shares of a closed-end fund that might trade at a Discount or unsustainable premium is more pronounced 7 for investors who wish to sell their shares in a relatively short period of time because, for those investors, realization of a gain or loss on their investments is likely to be more dependent upon the existence of a premium or Discount than upon portfolio performance. Based on an analysis of Herzfeld, the Discount of a fund typically widens during a rights offering and sometimes even before the offering begins. The Discount that may occur after the completion of a rights offering (or in particular the Offering) is difficult to analyze because there are so many other factors aside from merely conducting a rights offering that could influence the Fund's Discount. Based on its research, Herzfeld has concluded that, subsequent to a rights offering, there is no evidence that discounts widen or become persistent simply because a rights offering was conducted. For reference we have provided data about the Fund's Discount. See "Market Price and Net Asset Value Information" below. REPURCHASE AND CHARTER PROVISIONS. You may sell your shares on the NYSE but, because the Fund is a closed-end fund, you do not have the right to redeem your shares. The Fund is authorized to repurchase its shares on the open market when the shares are trading at a discount from net asset value as determined by the Board from time to time. In addition, certain provisions of the Fund's charter (the "Charter") and by-laws (the "By-Laws") may be regarded as "anti-takeover" provisions. The Fund also has elected to become subject to certain provisions of the Maryland General Corporation Law that may be regarded as anti-takeover provisions. The overall effect of these provisions is to render the accomplishment of a merger or the assumption of control by a principal shareholder more difficult. These provisions may have the effect of depriving you of an opportunity to sell your shares at a premium above the prevailing market price. See "Anti-Takeover Provisions of the Charter and By-Laws." NON-DIVERSIFIED STATUS. As a non-diversified investment company under the 1940 Act, the Fund is not as limited as a diversified fund would be in the proportion of its assets that may be invested in securities of a single issuer. As a result of investing a greater proportion of its assets in the securities of a smaller number of issuers, the Fund may be more vulnerable to events affecting a single issuer and therefore subject to greater volatility than a fund that is more broadly diversified. Accordingly, an investment in the Fund may present greater risk to an investor than an investment in a diversified company. INDUSTRY RISKS AND RISKS ASSOCIATED WITH THE FUND'S INVESTMENTS. The Fund may from time to time invest a significant portion of its assets in companies in various industries including, but not limited to, insurance, real estate, financial and utilities and, as a result, the value of the Fund's shares would be more susceptible to factors affecting those particular types of industries, including government regulation, greater price volatility for the overall market, rapid obsolescence of products and services, intense competition and strong market reactions to technological developments. See "Risks Associated with the Fund's Investments" below. FOREIGN SECURITIES. Although the Fund is limited as to the amount of foreign securities in which it may invest (e.g., generally the Fund may invest up to 20% of its assets in the securities of foreign companies), investing in securities of foreign companies and foreign governments, which generally are denominated in foreign currencies, may involve certain risk and opportunity considerations not typically associated with investing in domestic companies and could cause the Fund to be affected favorably or unfavorably by changes in currency exchange rates or revaluations of currencies. The Fund does not expect to make significant investments in foreign securities. DEPENDENCE ON KEY PERSONNEL. The Advisers are dependent upon the expertise of Stewart Horejsi in providing advisory services with respect to the Fund's investments. If the Advisers were to lose the services of Mr. Horejsi, their ability to service the Fund could be adversely affected. There can be no assurance that a suitable replacement could be found for Mr. Horejsi in the event of his death, resignation, retirement or inability to act on behalf of the Advisers. SIZE OF FUND. As of November 15, 2002, the Fund had net assets of approximately $35.8 million. As a fund with a relatively small asset base, the Fund may be subject to certain operational inefficiencies including: higher expense ratio, less coverage by analysts and the marketplace in general which can contribute to a less active trading market for the Fund's shares and consequently a wider discount, more limited ability to attract new investors and/or take advantage of investment opportunities and less ability to take advantage of lower transaction costs available to larger investors. LEVERAGING. Although the Fund is not currently leveraged, under the 1940 Act and subject to certain exceptions, the Fund has the authority to issue debt or preferred stock, so long as the Fund's total assets immediately after such issuance, less certain ordinary course liabilities, exceed 300% of the amount of the debt outstanding and exceed 200% of the sum of the amount of preferred stock and debt outstanding. The Board has had discussions regarding the leveraging of the Funds common shares. Use of leverage may magnify the impact on the holders of Common Stock of changes in net asset value and the cost of leverage may exceed the return on the securities acquired with the proceeds of leverage, thereby diminishing rather than enhancing the return to such shareholders and generally making the Fund's total return to such shareholders more volatile. In addition, the Fund may be required to sell investments in order to meet dividend or interest payments on the debt or preferred stock when it may be disadvantageous to do so. Leveraging through the issuance of preferred stock requires that the holders of the preferred stock have class voting rights on various matters that could make it more difficult 8 for the holders of the Common Stock to change the investment objective or fundamental policies of the Fund, to convert it to an open-end fund or make certain other changes. See "Leverage" and "Risk Associated with Leverage" in the SAI. You should carefully consider your ability to assume the foregoing risks before making an investment in the Fund. An investment in shares of the Fund is not appropriate for all investors. FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES - ------------------------------------------------------------------------------------------------------------ Sales Load (as a percentage of the offering price) $0 Dividend Reinvestment Plan Fees $0
ANNUAL FUND EXPENSES (as a percentage of net assets attributable to common shares) - ------------------------------------------------------------------------------------------------------------ Management Fees 1.25% Administration Fees 0.30% Other Expenses 1.08%
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS You would pay the following expenses on a $1,000 investment $26.30 $80.78 $137.85 $292.89 assuming a 5% annual return.
The purpose of the foregoing table and example is to assist Rights holders in understanding the various costs and expenses that an investor in the Fund bears, directly or indirectly, BUT SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RATES OF RETURN. THE ACTUAL EXPENSES OF THE FUND MAY BE GREATER OR LESS THAN THOSE SHOWN. The figures provided under "Other Expenses" are based upon estimated amounts for the current fiscal year. For more complete descriptions of certain of the Fund's cost and expenses, see "Management of the Fund" in this Prospectus and the SAI. Also see "Expenses of the Fund" below. As stated above, the Independent Directors conditioned their approval of the Offering on (1) the Advisers' agreeing to waive one-half of any advisory fees which would be charged against the uninvested proceeds from the Offering until such time as 50% or more of the proceeds have been invested in common stock equities in accordance with the Fund's investment objective and (2) the Fund's administrator agreeing to cap the Fund's expense ratio for the one-year period following the Offering at the Fund's actual expense ratio in effect on the expiration of the Offering, excluding extraordinary expenses. The Advisers and the Fund's administrator have agreed to both of these conditions, neither of which is reflected in the foregoing table and example. FINANCIAL HIGHLIGHTS The table below sets forth selected financial data for a share of Common Stock outstanding throughout the period presented. The below per share operating performance and ratios for the period ending June 30, 2001 and prior years, were audited by the Fund's previous independent accountants. The below per share operating performance and ratios for the period ended June 30, 2002, were audited by KPMG LLP, the Fund's independent accountants, as stated in their report which is incorporated by reference into the SAI. The following information should be read in conjunction with the Financial Statements and Notes thereto, which are incorporated by reference into the SAI. The table below contains per share operating performance data, total investment returns, ratios to average net assets and other supplemental data. 9
-------------------------------------------------------------------------------------- Year Ended June 30 -------------------------------------------------------------------------------------- 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 -------------------------------------------------------------------------------------- OPERATING PERFORMANCE: Net asset value, beginning of year $8.65 $8.96 $10.07 $10.75 $10.17 $9.62 $10.07 $9.39 $10.28 $9.67 -------------------------------------------------------------------------------------- Net investment income 0.58 0.70 0.67 0.78 0.75 0.73 0.76 0.76 0.75 0.91 Net realized and unrealized gain/ (loss) on investments (1.49) (0.31) (1.02) (0.70) 0.59 0.62 (0.41) 0.72 (0.77) 0.60 -------------------------------------------------------------------------------------- Total from investment operations (0.91) 0.39 (0.35) 0.08 1.34 1.35 0.35 1.48 (0.02) 1.51 -------------------------------------------------------------------------------------- DISTRIBUTIONS: Dividends paid from net investment income to shareholders (0.59) (0.70) (0.76) (0.76) (0.76) (0.80) (0.80) (0.80) (0.87) (0.90) Net asset value, end of year $7.15 $8.65 $8.96 $10.07 $10.75 $10.17 $9.62 $10.07 $9.39 $10.28 -------------------------------------------------------------------------------------- Market value, end of year $6.78 $8.50 $8.25 $9.63 $9.63 $9.13 $9.00 $9.25 $9.38 $10.75 ====================================================================================== Total investment return based on net asset value('D') -11.36% 4.41% -3.70% 0.64% 13.57% 15.19% 3.64% 17.08% (0.60%) 16.36% ====================================================================================== Total investment return based on market value('D') -14.47% 11.77% -6.81% 7.85% 14.01% 10.48% 5.56% 7.72% (5.10%) 20.69% ====================================================================================== RATIOS AND SUPPLEMENTAL DATA: Ratio of expenses to average net assets 1.95%(*) 1.82%(*) 2.51%(*) 1.12% 1.12% 1.19% 1.17% 1.22% 1.16% 1.23% Ratio of net investment income to average net assets 6.96% 8.03% 7.08% 7.46% 7.11% 7.43% 7.49% 7.99% 7.38% 9.13% SUPPLEMENTAL DATA: Portfolio turnover rate 180% 83% 53% 58% 73% 26% 30% 30% 47% 45% Net assets, end of year (in 000's) $40,514 $48,990 $50,591 $56,841 $60,670 $57,000 $54,000 $57,000 $53,000 $56,000 --------------------------------------------------------------------------------------- Number of shares outstanding at end of year (in 000's) 5,664 5,664 5,644 5,644 5,644 5,644 5,644 5,644 5,638 5,528
('D') Assumes reinvestment of distributions at the price obtained by the Fund's Dividend Reinvestment Plan. (*) For the years ended June 30, 2002, 2001 and 2000, the ratio of expenses to average net assets excluding the costs attributable to a proxy contest and related matters was 1.65%, 1.26% and 1.55%, respectively. THE OFFERING TERMS OF THE OFFERING. The Fund is issuing to shareholders on the Record Date ("Record Date Shareholders") Rights to subscribe for shares of the Common Stock. Each Record Date Shareholder is being issued one transferable Right for each share of Common Stock owned on the Record Date. The Rights entitle the holder to acquire one Share at the Subscription Price for each one Right held. The number of Rights to be issued to a Record Date Shareholder will be rounded down to the nearest number of Rights evenly divisible by one. Rights may be exercised at any time during the period which commences on December 2, 2002, and ends at 5:00 p.m., New York time, on December 20, 2002 (the "Subscription Period"), unless extended by the Fund to a date not later than December 29, 2002, at 5:00 p.m., New York time. See "Expiration of the Offering." The Right to acquire one additional Share for each one Right held during the Subscription Period at the Subscription Price is hereinafter referred to as the "Primary Subscription." In addition, any Record Date Shareholder who fully exercises all Rights initially issued to him is entitled to subscribe for shares which were not otherwise subscribed for by others in the Primary Subscription (the "Over-Subscription Privilege"). For purposes of determining the maximum number of shares a Record Date Shareholder may acquire pursuant to the Offering, broker-dealers whose shares are held of record by Cede & Co., Inc. ("Cede"), nominee for The Depository Trust Company, or by any other depository or nominee, will be deemed to be the holders of the Rights that are issued to Cede or such other depository or nominee on their behalf. Shares acquired pursuant to the Over-Subscription Privilege are subject to allotment, which is more fully discussed below under "Over-Subscription Privilege." The Ernest Horejsi Trust No. 1B, a South Dakota grantor trust established by Stewart R. Horejsi's father (the "EH Trust"), is the Fund's largest shareholder, holding 20.68% of the Fund's commons stock. The EH Trust and certain other trusts and entities affiliated with the Horejsi family (collectively defined on Page 2 above as the "Horejsi Affiliates") may be deemed 10 to control the Fund (see "Security Ownership by Certain Beneficial Owners" in the SAI). Stewart R. Horejsi, the Fund's primary investment manager (see "Information Regarding the Advisers and Administrator" below), is a beneficiary under the EH Trust as well as under various other trusts comprising part of the Horejsi Affiliates. Mr. Horejsi is also the primary investment manager for all of the Horejsi Affiliates. The Horejsi Affiliates may or may not exercise their Over-Subscription Privilege. If the Horejsi Affiliates fully exercise their Over-Subscription Privilege, under certain circumstances (e.g., low shareholder participation in both the Offering and the Over-Subscription Privilege), the Horejsi Affiliates could substantially increase their percentage ownership in the Fund at an advantageous price. For example, with Horejsi Affiliates presently owning 20.7% of the Fund's shares, if shareholder participation was such that 30% of the shares in the Offering were unsubscribed or the Rights were not traded, thus permitting the Affiliates as well as other participating shareholders to over-subscribe in proportion to their ownership in the Fund, the Horejsi Affiliates could increase their ownership position in the Fund from 20.7% to 25% (or possibly more if shareholder participation in the over-subscription privilege was low) at an advantageous price. Any shares acquired in the Offering by the Horejsi Affiliates as "affiliates" of the Fund as that term is defined under the Securities Act of 1933, as amended (the "Securities Act"), may only be sold in accordance with Rule 144 under the Securities Act or another applicable exemption or pursuant to an effective registration statement under the Securities Act. In general, under Rule 144, as currently in effect, an "affiliate" of the Fund is entitled to sell, within any three-month period, a number of shares that does not exceed the greater of 1% of the then outstanding shares of Common Stock or the average weekly reported trading volume of the Common Stock during the four calendar weeks preceding such sale. Sales under Rule 144 are also subject to certain restrictions on the manner of sale, to notice requirements and to the availability of current public information about the Fund. In addition, any profit resulting from the sale of shares so acquired, if the shares are held for a period of less than six months, will be returned to the Fund. Rights will be evidenced by Subscription Certificates. The number of Rights issued to each holder will be stated on the Subscription Certificates delivered to the holder. The method by which Rights may be exercised and shares paid for is set forth below in "Method of Exercising Rights" and "Payment for Shares." A Rights holder will have no right to rescind a purchase after the Subscription Agent has received payment. See "Payment for Shares" below. Shares issued pursuant to an exercise of Rights will be listed on the NYSE. The Rights are transferable until the Expiration Date and have been admitted for trading on the NYSE. Assuming a market exists for the Rights, the Rights may be purchased and sold through usual brokerage channels and sold through the Subscription Agent. Although no assurance can be given that a market for the Rights will develop, trading in the Rights on the NYSE will begin three Business Days before the Record Date and may be conducted until the close of trading on the last NYSE trading day prior to the Expiration Date. Trading of the Rights on the NYSE will be conducted on a when issued basis until and including the date on which the Subscription Certificates are mailed to Record Date Shareholders and thereafter will be conducted on a regular way basis until and including the last Exchange trading day prior to the Expiration Date. The method by which Rights may be transferred is set forth below in "Method of Transferring Rights." The underlying shares will also be admitted for trading on the NYSE and will begin trading ex-Rights two Business Days prior to the Record Date. PURPOSE OF THE OFFERING. The Board of Directors of the Fund has determined that it would be in the best interests of the Fund and the shareholders to increase the assets of the Fund available for investment, thereby permitting the Fund to be in a better position to more fully take advantage of investment opportunities that may arise. In addition, the Board believes that increasing the size of the Fund may lower the Fund's expenses as a proportion of average net assets because the Fund's fixed costs can be spread over a larger asset base. The Offering seeks to reward existing shareholders by giving them the right to purchase additional shares at a price that may be below market and/or net asset value without incurring any commission charge. The distribution to shareholders of transferable Rights, which themselves may have intrinsic value, will also afford non-subscribing shareholders the potential of receiving a cash payment upon sale of such Rights, receipt of which may be viewed as partial compensation for the possible dilution of their interests in the Fund. See "Reasons for Conducting the Offering" below. REASONS FOR CONDUCTING THE OFFERING. Although there are numerous reasons for the Fund's conducting a rights offering, Management has emphasized two primary reasons: Spreading Expenses Across More Assets. As a closed-end mutual fund gets smaller, its expense ratio (i.e., the ratio of expenses to fund assets) necessarily increases. This is because all funds have certain fixed costs (e.g., fidelity bonds, insurance, legal, accounting and printing costs, etc.) which are not charged in proportion to the fund's size. As a fund gets smaller, these fixed costs get spread over fewer assets, thus resulting in a higher expense ratio. The opposite occurs as a fund's assets increase, that is, the fixed costs are spread across a larger asset base thus resulting in a lower expense ratio. In the case of the Fund, since its initial public offering in 1974, it has shrunk from its original size of $70 million to around $35.8 million as of November 15, 2002. Management believes that, even at $70 million, the Fund would lack the critical mass to be considered an efficiently run closed-end fund. 11 The current actual expense ratio ("Current Actual Expense Ratio") is estimated by Management to be 2.63% on an annualized basis based on total current net assets of approximately $35.8 million (as of November 15, 2002). 1.55% of this Current Actual Expense Ratio consists of the fees paid to the Advisers and Administrator. These percentages are not expected to change, regardless of any potential increase in net assets from the Offering. The remaining component of the Current Actual Expense Ratio (i.e., 1.08%) consists primarily of expenses charged as a fixed-dollar amount (e.g., legal fees, customary proxy related expenses, and insurance). Since these expenses are not charged on a percentage basis, they do not tend to be significantly affected by increases or decreases in the Fund's total net assets. Using the actual expenses incurred by the Fund during fiscal year ending June 30, 2002, the fixed-dollar expenses totaled $410,400 or 1.08% of current total net assets. It is this fixed-dollar amount that would be spread over the larger asset base from the Offering and thus result in a decrease in the Current Actual Expense Ratio. Assuming that (i) the Subscription Price is $5.09 (i.e., 95% of the lower of the Fund's NAV or average 5-day volume-weighted closing sale price on November 15, 2002), and (ii) the Offering is fully subscribed, the Fund's estimated expense ratio would be 1.94%. This compares favorably to the Current Actual Expense Ratio of 2.63% - a difference of 0.73% per annum - representing a significant increase in operating efficiency. This difference is much smaller if certain expenses that Management does not consider to be typical operating expenses are excluded. For example, during its last fiscal year, the Fund incurred a high level of legal and proxy related expenses in connection with a proxy contest that occurred during the Fall of 2001 and a special shareholders' meeting in April 2002 to change the Fund's adviser and objective. Management does not anticipate this type or level of expense to typically occur in the future. Excluding the higher expenses incurred in the proxy contest and special shareholders meeting, Management estimates that the Fund's expense ratio will be 2.23% annualized. Based on this "adjusted" expense ratio, the above example would indicate an annualized savings of 0.29%. The Administrator has agreed to reimburse expenses for the one-year period beginning on the Expiration Date to the extent necessary to maintain the net average annualized expense ratio of the Fund at its level on the Expiration Date, excluding any out of the ordinary expenses (e.g., litigation costs) incurred by the Fund after the Offering. TAKING ADVANTAGE OF INVESTMENT OPPORTUNITIES. As of the date of this Prospectus, the Fund is fully invested in accordance with its investment objective. The recent decline in the stock market over the last 2 years has resulted, in some instances, in lower equity prices on good companies which have not been available during the recent past. In addition, lower stock prices are sometimes seen toward year-end due to investors selling portfolio holdings to recognize tax losses. The Offering may permit the Fund to take advantage of such opportunities if they arise, without necessarily having to liquidate Fund holdings to raise cash. When Management sees an opportunity, it wants to be able to take advantage of it quickly and make a significant investment, without having to sell current holdings in the process. Having the cash resources to accomplish this is very important. Other reasons supporting the Offering include the following: INCREASING LIQUIDITY. By conducting the Offering, the liquidity of the Fund's shares in the market may increase based solely on the fact that there would be more shares outstanding. In addition, by making the Rights transferable, there is a good probability that the number of Fund shareholders will increase after the Offering, which would also increase the likelihood of greater liquidity in the Fund's shares. RETAINING GOOD INVESTMENTS. In a closed-end fund like the Fund, there are limits on the Fund's ability to take advantage of new, possibly better opportunities as they may arise in the future. Rather than sell a good company to free up cash to take advantage of these new opportunities, the Advisers believe that shareholders are better served by raising more cash through a rights offering. This approach in the long-term tends to be more tax-efficient. REDUCED TRANSACTION COSTS. A rights offering rewards existing shareholders an opportunity to purchase additional shares of Common Stock at a price that is below market value and net asset value without the transaction costs that would be associated with open-market purchases or initial public offerings (e.g., brokerage commissions and underwriting fees). MORE INFLUENCE. A rights offering permits a fund to grow, and as it grows, a fund can exert more influence in effecting changes (or preventing changes) within the companies in which it invests. INVESTING FOR CONTROL. Although investing for control is not a primary strategy of the Fund, at those times when Management sees an opportunity and chooses to do so, it wants the Fund to be big enough and thus have the financial wherewithal to buy the requisite controlling shares. BETTER TREATMENT FROM BROKERS. Larger funds can buy "in quantity" and can sometimes receive better execution and lower commissions from brokers because of their size. IMPROVING ANALYST COVERAGE. Increasing the Fund's size may increase analyst coverage which may in turn stimulate investor interest in the Fund and ultimately result in narrowing and maintaining a narrow discount. 12 THE SUBSCRIPTION PRICE. The Subscription Price for the shares to be issued under the Offering will be equal to 95% of the lesser of (a) the NAV on the Pricing Date or (b) the volume-weighted average closing sale price of a share on the NYSE for the Pricing Date and the four preceding trading days (the "Average Closing Price"). For example, if the Offering were held using a pricing date of November 15, 2002, at which time the NAV was $6.32, the market price on such date was $5.35, the discount was 15.34%, and the Average Closing Price for the week was $5.36, then the Subscription Price would be $5.09. OVER-SUBSCRIPTION PRIVILEGE. If all of the Rights initially issued are not exercised, any shares for which subscriptions have not been received will be offered, by means of the Over-Subscription Privilege, to Record Date Shareholders who have exercised all the Rights initially issued to them and who wish to acquire more than the number of shares for which the Rights issued to them are exercisable. Record Date Shareholders who exercise all the Rights initially issued to them will have the opportunity to indicate on the Subscription Certificate how many shares they are willing to acquire pursuant to the Over-Subscription Privilege. If sufficient shares remain after the Primary Subscriptions have been exercised, all over-subscriptions will be honored in full. If sufficient shares are not available to honor all over-subscriptions, the available shares will be allocated among those who over-subscribe based on the number of Rights originally issued to them by the Fund. The percentage of remaining shares each over-subscribing shareholder may acquire will be rounded down to result in delivery of whole shares. The allocation process may involve a series of allocations in order to assure that the total number of shares available for over-subscriptions is distributed on a pro rata basis. The method by which shares will be distributed and allocated pursuant to the Over-Subscription Privilege is as follows. Shares will be available for purchase pursuant to the Over-Subscription Privilege only to the extent that the maximum number of shares is not subscribed for through the exercise of the Primary Subscription by the Expiration Date. If the shares so available ("Excess Shares") are not sufficient to satisfy all subscriptions pursuant to the Over-Subscription Privilege, the Excess Shares will be allocated pro rata (subject to the elimination of fractional shares) among those holders of Rights exercising the Over-Subscription Privilege, in proportion, not to the number of shares requested pursuant to the Over-Subscription Privilege, but to the number of shares held on the Record Date; provided, however, that if this pro rata allocation results in any holder being allocated a greater number of Excess Shares than the holder subscribed for pursuant to the exercise of such holder's Over-Subscription Privilege, then such holder will be allocated only such number of Excess Shares as such holder subscribed for and the remaining Excess Shares will be allocated among all other holders exercising Over-Subscription Privileges. The formula to be used in allocating the Excess Shares is as follows: Holder's Record Date Position -------------------------------------- Total Record Date Position by All x Excess Shares Remaining. Over-Subscribers The Fund will not offer or sell any shares which are not subscribed for under the Primary Subscription or the Over-Subscription Privilege. EXPIRATION OF THE OFFERING. The Offering will expire at 5:00 p.m., New York time, on the Expiration Date (December 20, 2002), unless extended by the Fund to a date not later than December 29, 2002, at 5:00 p.m., New York time (the "Extended Expiration Date"). Rights will expire on the Expiration Date (or Extended Expiration Date as the case may be) and thereafter may not be exercised. SALES BY SUBSCRIPTION AGENT. Holders of Rights who do not wish to exercise any or all of their Rights may instruct the Subscription Agent to sell any unexercised Rights. The Subscription Certificates representing the Rights to be sold by the Subscription Agent must be received on or before the Expiration Date (unless extended). Upon the timely receipt of appropriate instructions to sell Rights, the Subscription Agent will use its best efforts to complete the sale and will remit the proceeds of sale, net of commissions, if any, to the holders. If the Rights can be sold, sales of the Rights will be deemed to have been effected at the weighted average price received by the Subscription Agent on the day such Rights are sold. The selling Rights holder will pay all brokerage commissions incurred by the Subscription Agent on a prorata basis with other selling Rights holders. These sales may be effected by the Subscription Agent through independent registered broker-dealers. The Subscription Agent will attempt to sell all Rights that remain unclaimed as a result of Subscription Certificates being returned by the postal authorities as undeliverable as of the fourth Business Day prior to the Expiration Date. These sales will be made net of commissions on behalf of the non-claiming shareholders. Proceeds from those sales will be held by Eastern Bank for the account of the non-claiming shareholder until the proceeds are either claimed or escheat. There can be no assurance that the Subscription Agent will be able to complete the sale of any of these Rights and neither the Fund nor the Subscription Agent has guaranteed any minimum sales price for the Rights. All of these Rights will be sold at the market price, if any, on the NYSE. METHOD OF TRANSFERRING RIGHTS. The Rights evidenced by a single Subscription Certificate may be transferred in whole by endorsing the Subscription Certificate for transfer in accordance with the accompanying instructions. A portion of the Rights evidenced by a single Subscription Certificate (but not fractional Rights) may be transferred by delivering to the Subscription Agent a Subscription Certificate properly endorsed for transfer, with 13 instructions to register the portion of the Rights evidenced thereby in the name of the transferee (and to issue a new Subscription Certificate to the transferee evidencing the transferred Rights). In this event, a new Subscription Certificate evidencing the balance of the Rights will be issued to the Rights holder or, if the Rights holder so instructs, to an additional transferee. Holders wishing to transfer all or a portion of their Rights (but not fractional Rights) should allow at least three Business Days prior to the Expiration Date for (i) the transfer instructions to be received and processed by the Subscription Agent, (ii) a new Subscription Certificate to be issued and transmitted to the transferee or transferees with respect to transferred Rights, and to the transferor with respect to retained rights, if any, and (iii) the Rights evidenced by the new Subscription Certificates to be exercised or sold by the recipients thereof. Neither the Fund nor the Subscription Agent shall have any liability to a transferee or transferor of Rights if Subscription Certificates are not received in time for exercise or sale prior to the Expiration Date. Except for the fees charged by the Subscription Agent (which will be paid by the Fund as described below), all commissions, fees and other expenses (including brokerage commissions and transfer taxes) incurred in connection with the purchase, sale or exercise of Rights will be for the account of the transferor of the Rights, and none of these commissions, fees or expenses will be paid by the Fund or the Subscription Agent. The Fund anticipates that the Rights will be eligible for transfer through, and that the exercise of the Primary Subscription and Over-Subscription may be effected through, the facilities of DTC. Rights exercised through DTC are referred to as "DTC Exercised Rights". METHOD OF EXERCISING RIGHTS. Rights may be exercised by filling in and signing the reverse side of the Subscription Certificate and mailing it in the envelope provided, or otherwise delivering the completed and signed Subscription Certificate to the Subscription Agent, together with payment for the shares as described below under "Payment for Shares." Rights may also be exercised through a Rights holder's broker, who may charge the Rights holder a servicing fee in connection with such exercise. Completed Subscription Certificates must be received by the Subscription Agent prior to 5:00 p.m., New York time, on the Expiration Date (unless payment is effected by means of a notice of guaranteed delivery as described below under "Payment for Shares"). The Subscription Certificate and payment should be delivered to Colbent Corporation at the following address: If By Mail: Colbent Corporation Attn: Corporate Actions P.O. Box 859208 Braintree, MA 02185-9208 If By Hand: Securities Transfer & Reporting Services, Inc. c/o Colbent Corporation Attn: Corporate Actions 100 William Street, Galleria New York, New York 10038 If By Overnight Courier: Colbent Corporation Attn: Corporate Actions 40 Campanelli Drive Braintree, MA 02184 SUBSCRIPTION AGENT. The Subscription Agent is Colbent Corporation, Attn: Corporate Actions, P.O. Box 859208, Braintree, MA 02185-9208. The Subscription Agent will receive from the Fund an amount estimated to be $62,500, comprised of the fee for its services and the reimbursement for certain expenses related to the Offering. INQUIRIES BY ALL HOLDERS OF RIGHTS SHOULD BE DIRECTED TO THE INFORMATION AGENT AT 1-800-732-6518; HOLDERS MAY ALSO CONSULT THEIR BROKERS OR NOMINEES. PAYMENT FOR SHARES. Payment for shares shall be calculated by multiplying the Estimated Subscription Price of $5.09 per share times the sum of (i) the number of Rights held and intended to be exercised in the Primary Subscription, plus (ii) the number of additional shares for which a shareholder wishes to over-subscribe under the Over-Subscription Privilege. For example, if a shareholder receives 100 Rights and wishes to subscribe for 100 shares in the Primary Subscription, and also wishes to over-subscribe for 50 additional shares under the Over-Subscription Privilege, he would send in $5.09 x 100 ($509.00) plus $5.09 x 50 ($255). Holders of Rights who wish to acquire shares on Primary Subscription or pursuant to the Over-Subscription Privilege may choose between the following methods of payment: 14 1. If, prior to 5:00 p.m., New York time, on the Expiration Date, the Subscription Agent shall have received a notice of guaranteed delivery by telegram or otherwise, from a bank or trust company or a NYSE member firm guaranteeing delivery of (i) payment of the Estimated Subscription Price of $5.09 per share for the shares subscribed for in the Primary Subscription and any additional shares subscribed for pursuant to the Over-Subscription Privilege and (ii) a properly completed and executed Subscription Certificate, the subscription will be accepted by the Subscription Agent. The Subscription Agent will not honor a notice of guaranteed delivery unless a properly completed and executed Subscription Certificate is received by the Subscription Agent prior to 5:00 p.m., New York time, on the third (3rd) business day after the Expiration Date (the "Protect Period"). 2. Alternatively, a shareholder can, together with the properly completed and executed Subscription Certificate, send payment for the shares acquired in the Primary Subscription and any additional shares subscribed for pursuant to the Over-Subscription Privilege, to the Subscription Agent based on the Estimated Subscription Price of $5.09 per share. To be accepted, such payment, together with the Subscription Certificate, must be received by the Subscription Agent prior to 5:00 p.m., New York time, on the Expiration Date. If the Estimated Subscription Price is greater than the actual per share purchase price, the excess payment will be applied toward the purchase of additional shares to the extent that there remain sufficient unsubscribed shares available after the Primary and Over-Subscription allocations are completed. To the extent that sufficient unsubscribed shares are not available to apply all of the excess payment toward the purchase of additional shares, available shares will be allocated in the manner consistent with that described in the section entitled "Over-Subscription Privilege" above. Any excess payment will be refunded to you to the extent that additional shares are not available. A PAYMENT, PURSUANT TO THE SECOND METHOD DESCRIBED ABOVE, MUST ACCOMPANY ANY SUBSCRIPTION CERTIFICATE FOR SUCH SUBSCRIPTION CERTIFICATE TO BE ACCEPTED. Within five (5) business days following the completion of the Protect Period, a confirmation will be sent by the Subscription Agent to each shareholder (or, if the Fund's shares on the Record Date are held by Cede or any other depository or nominee, to Cede or such other depository or nominee). The date of the confirmation is referred to as the "Confirmation Date." The confirmation will show (i) the number of shares acquired pursuant to the Primary Subscription; (ii) the number of shares, if any, acquired pursuant to the Over-Subscription Privilege; (iii) the per Share and total purchase price for the shares; and (iv) any additional amount payable by such shareholder to the Fund (e.g., if the Estimated Subscription Price was less than the Subscription Price on the Pricing Date) or any excess to be refunded by the Fund to such shareholder (e.g., if the Estimated Subscription Price was more than the Subscription Price on the Pricing Date). Any additional payment required from a shareholder must be received by the Subscription Agent prior to 5:00 p.m., New York time, on the tenth (10th) business day after the Confirmation Date, and any excess payment to be refunded by the Fund to such shareholder will be mailed by the Subscription Agent within ten (10) business days after the Confirmation Date. All payments by a shareholder must be made in United States Dollars by money order or by checks drawn on banks located in the Continental United States payable to Eastern Bank acting on behalf of the Subscription Agent. Whichever of the above two methods is used, issuance and delivery of certificates for the shares subscribed for are subject to collection of funds and actual payment pursuant to any notice of guaranteed delivery. The Subscription Agent will deposit all checks received by it prior to the final due date into a segregated interest bearing account at Eastern Bank pending distribution of the shares from the Offering. All interest will accrue to the benefit of the Fund and investors will not earn interest on payments submitted. YOU WILL HAVE NO RIGHT TO RESCIND YOUR SUBSCRIPTION AFTER THE SUBSCRIPTION AGENT HAS RECEIVED THE SUBSCRIPTION CERTIFICATE OR NOTICE OF GUARANTEED DELIVERY. If a holder of Rights who acquires shares pursuant to the Primary Subscription or the Over-Subscription Privilege does not make payment of any amounts due, the Fund reserves the right to take any or all of the following actions: (i) find other purchasers for such subscribed-for and unpaid-for shares; (ii) apply any payment actually received by it toward the purchase of the greatest whole number of shares which could be acquired by such holder upon exercise of the Primary Subscription or the Over-Subscription Privilege; (iii) sell all or a portion of the shares purchased by the holder in the open market, and apply the proceeds to the amounts owed; and (iv) exercise any and all other rights or remedies to which it may be entitled, including, without limitation, the right to set off against payments actually received by it with respect to such subscribed shares and to enforce the relevant guaranty of payment. Holders who hold shares of Common Stock for the account of others, such as brokers, trustees or depositaries for securities, should notify the respective beneficial owners of the shares as soon as possible to ascertain the beneficial owners' intentions and to obtain instructions with respect to the Rights. If the beneficial owner so instructs, the record holder of the Rights should complete Subscription Certificates and submit them to the Subscription Agent with the proper payment. In addition, 15 beneficial owners of Common Stock or Rights held through such a holder should contact the holder and request the holder to effect transactions in accordance with the beneficial owner's instructions. The instructions accompanying the Subscription Certificates should be read carefully and followed in detail. DO NOT SEND SUBSCRIPTION CERTIFICATES TO THE FUND. The method of delivery of Subscription Certificates and payment of the Subscription Price to the Subscription Agent will be at the election and risk of the Rights Holders, but if sent by mail it is recommended that the certificates and payments be sent by registered mail, properly insured, with return receipt requested, and that a sufficient number of days be allowed to ensure delivery to the Subscription Agent and clearance of payment prior to 5:00 p.m., New York time, on the Expiration Date. Because uncertified personal checks may take at least five business days to clear, you are strongly urged to pay, or arrange for payment, by means of a certified or cashier's check or money order. All questions concerning the timeliness, validity, form and eligibility of any exercise of Rights will be determined by the Fund, whose determinations will be final and binding. The Fund in its sole discretion may waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as it may determine, or reject the purported exercise of any Right. Subscriptions will not be deemed to have been received or accepted until all irregularities have been waived or cured within such time as the Fund determines in its sole discretion. Neither the Fund nor the Subscription Agent will be under any duty to give notification of any defect or irregularity in connection with the submission of Subscription Certificates or incur any liability for failure to give such notification. DELIVERY OF STOCK CERTIFICATES. Certificates representing shares purchased pursuant to the Primary Subscription will be delivered to subscribers as soon as practicable after the corresponding Rights have been validly exercised and full payment for the shares has been received and cleared. Certificates representing shares purchased pursuant to the Over-Subscription Privilege will be delivered to subscribers as soon as practicable after the Expiration Date and after all allocations have been effected. FOREIGN RESTRICTIONS. Subscription Certificates will only be mailed to Record Date Shareholders whose addresses are within the United States (other than an APO or FPO address). Record Date Shareholders whose addresses are outside the United States or who have an APO or FPO address and who wish to subscribe to the Offering either in part or in full should contact the Subscription Agent (Colbent Corporation), by written instruction or recorded telephone conversation at 781-843-1833 ext 203, no later than three Business Days prior to the Expiration Date. The Fund will determine whether the Offering may be made to any such shareholder. If the Subscription Agent has received no instruction by the third business day prior to the Expiration Date or the Fund has determined that the Offering may not be made to a particular shareholder, the Subscription Agent will attempt to sell all of such shareholder's Rights and remit the net proceeds, if any, to such shareholders. If the Rights can be sold, sales of these Rights will be deemed to have been effected at the weighted average price received by the Subscription Agent on the day the Rights are sold, less any applicable brokerage commissions, taxes and other expenses. FEDERAL INCOME TAX CONSEQUENCES ASSOCIATED WITH THE OFFERING. The following is a general summary of the significant federal income tax consequences of the receipt of Rights by a Record Date Shareholder and a subsequent lapse, exercise or sale of such Rights. The discussion also addresses the significant federal income tax consequences to a holder that purchases Rights in a secondary-market transaction (e.g., on the NYSE). The discussion is based upon applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury Regulations promulgated thereunder and other authorities currently in effect but does not address any state, local or foreign tax consequences of the Offering. The discussion assumes, as is expected, that the fair market value of the Rights distributed to all of the Record Date Shareholders will be less than 15% of the total fair market value of all of the Fund's Common Stock as of the Record Date. For purposes of the following discussion, the term "Old Share" shall mean a currently outstanding share of the Fund's Common Stock with respect to which a Right is issued and the term "New Share" shall mean a newly issued share of the Fund's Common Stock that is received upon the exercise of a Right. FOR ALL RECORD DATE SHAREHOLDERS. Neither the receipt nor the exercise of Rights by a Record Date Shareholder will result in taxable income to such shareholder for federal income tax purposes regardless of whether or not the shareholder makes the below-described election which is available under Section 307(b)(2) of the Code (a "Section 307(b)(2) Election"). If a Record Date Shareholder makes a Section 307(b)(2) Election, the shareholder's federal income tax basis in any Right received pursuant to the Offering will be equal to a portion of the shareholder's existing federal income tax basis in the related Old Share. If made, a Section 307(b)(2) Election is effective with respect to all Rights received by a Record Date Shareholder. A Section 307(b)(2) Election is made by attaching a statement to the Record Date Shareholder's federal income tax return for the taxable year which includes the Record Date. Record Date 16 Shareholders should carefully review the differing federal income tax consequences described below before deciding whether or not to make a Section 307(b)(2) Election. FOR RECORD DATE SHAREHOLDERS MAKING A SECTION 307(B)(2) ELECTION. LAPSE OF RIGHTS. If a Record Date Shareholder makes a Section 307(b)(2) Election, no taxable loss will be realized for federal income tax purposes if the shareholder retains a Right but allows it to lapse without exercise. Moreover, the existing federal income tax basis of the related Old Share will not be reduced as a result of such lapse. EXERCISE OF RIGHTS. If an electing Record Date Shareholder exercises a Right, the shareholder's existing federal income tax basis in the related Old Share must be allocated between such Right and the Old Share in proportion to their respective fair market values as of the Record Date. Upon such exercise of the shareholder's Rights, the New Shares received by the shareholder pursuant to such exercise will have a federal income tax basis equal to the sum of the basis of such Rights as described in the previous sentence and the Subscription Price paid for the New Shares (as increased by any servicing fee charged to the shareholder by his broker, bank or trust company and other similar costs). If the Record Date Shareholder subsequently sells such New Shares (and holds such shares as capital assets at the time of their sale), the shareholder will recognize a capital gain or loss equal to the difference between the amount received from the sale of the New Shares and the shareholder's federal income tax basis in the New Shares as described above. Such capital gain or loss will be long-term capital gain or loss if the New Shares are sold more than one year after the date that the New Shares are acquired by the Record Date Shareholder. In addition, if a Record Date Shareholder exercises a Right and later sells the related Old Share, his gain on the sale of the Old Share will be increased (or his loss decreased) by the amount of the shareholder's original basis in the Old Share that was allocated to the related Right as described above. SALE OF RIGHTS. If an electing Record Date Shareholder sells a Right, he will recognize a gain or loss equal to the difference between the amount received for such Right and the federal income tax basis of the Right computed as set forth above under "Exercise of Rights". Any such gain or loss will be capital gain or loss (if the Right is held as a capital asset at the time of its sale) and the Record Date Shareholder's holding period for the Right will include the shareholder's holding period for the related Old Share. Any such capital gain or loss will thus be long-term capital gain or loss if the related Old Share has been held by the Record Date Shareholder for more than one year at the time the Right is sold. In addition, if a Record Date Shareholder sells a Right and later sells the related Old Share, his gain on the sale of the Old Share will be increased (or his loss decreased) by the amount of the shareholder's original basis in the Old Share that was allocated to the Right as described above. FOR RECORD DATE SHAREHOLDERS NOT MAKING A SECTION 307(B)(2) ELECTION LAPSE OF RIGHTS. If a Record Date Shareholder does not make a Section 307(b)(2) Election, no taxable loss will be realized for federal income tax purposes if the shareholder retains a Right but allows it to lapse without exercise. Moreover, the federal income tax basis of the related Old Share will not be reduced as a result of such lapse. EXERCISE OF RIGHTS. If a non-electing Record Date Shareholder exercises his Rights, the federal income tax basis of the related Old Shares will remain unchanged and the New Shares will have a federal income tax basis equal to the Subscription Price paid for the New Shares (as increased by any servicing fee charged to the shareholder by his broker, bank or trust company and other similar costs). If the Record Date Shareholder subsequently sells such New Shares (and holds such shares as capital assets at the time of their sale), the shareholder will recognize a capital gain or loss equal to the difference between the amount received from the sale of the New Shares and the shareholder's federal income tax basis in the New Shares as described above. Such capital gain or loss will be long-term capital gain or loss if the New Shares are sold more than one year after the Record Date Shareholder acquires the New Shares. SALE OF RIGHTS. If a non-electing Record Date Shareholder sells a Right, he will recognize a gain equal to the entire amount received for such Right. Any such gain will be a capital gain (if the Right is held as a capital asset at the time of its sale) and the Record Date Shareholder's holding period for the Right will include the shareholder's holding period for the related Old Share. Any such capital gain will thus be long-term capital gain if the related Old Share has been held for more than one year at the time the Right is sold. In addition, the Record Date Shareholder's federal income tax basis in the related Old Share will remain unchanged. FOR SECONDARY-MARKET PURCHASERS OF RIGHTS. The exercise of Rights by a purchaser who acquires such Rights on the NYSE or in another secondary-market transaction will not result in taxable income to such purchaser. LAPSE OF RIGHTS. A taxable loss will be realized by a purchaser who allows his Rights to expire without exercise. Such taxable loss will be equal to the purchaser's cost for the Rights (as increased by any brokerage 17 costs and similar costs) and will be a short-term capital loss if the purchaser holds the Rights as capital assets at the time of their lapse. EXERCISE OF RIGHTS. A purchaser's basis for determining gain or loss upon the sale of a New Share acquired through the exercise of his Rights will be equal to the sum of the Subscription Price for the New Share plus the purchase price of the Rights that were exercised in order to acquire such New Share (with such Subscription Price and purchase price each being increased by any applicable servicing fees charged to the purchaser by his broker, bank or trust company and other similar costs). A purchaser's holding period for a New Share acquired upon exercise of a Right begins with the date of exercise of the Right. A taxable gain or loss recognized by a purchaser upon a sale of a New Share will be a capital gain or loss (assuming the New Share is held as a capital asset at the time of its sale) and will be a long-term capital gain or loss if the New Share has been held at the time of its sale for more than one year. SALE OF RIGHTS. A taxable gain or loss recognized by a purchaser upon a sale of a Right will be a short-term capital gain or loss if the Right is held as a capital asset at the time of its sale. EMPLOYEE PLAN CONSIDERATIONS. Shareholders that are employee benefit plans subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), including corporate savings and 401(k) plans, Keogh Plans of self-employed individuals and Individual Retirement Accounts ("IRA") (each a "Benefit Plan" and collectively, "Benefit Plans"), should be aware that additional contributions of cash in order to exercise Rights may be treated as Benefit Plan contributions and, when taken together with contributions previously made, may subject a Benefit Plan to excise taxes for excess or nondeductible contributions. In the case of Benefit Plans qualified under Section 401(a) of the Code, additional cash contributions could cause the maximum contribution limitations of Section 415 of the Code or other qualification rules to be violated. Benefit Plans contemplating making additional cash contributions to exercise Rights should consult with their counsel prior to making such contributions. Benefit Plans and other tax exempt entities, including governmental plans, should also be aware that if they borrow in order to finance their exercise of Rights, they may become subject to the tax on unrelated business taxable income ("UBTI") under Section 511 of the Code. If any portion of an IRA is used as security for a loan, the portion so used is also treated as distributed to the IRA depositor. ERISA contains prudence and diversification requirements and ERISA and the Code contain prohibited transaction rules that may impact the exercise of Rights. Among the prohibited transaction exemptions issued by the Department of Labor that may exempt a Benefit Plan's exercise of Rights are Prohibited Transaction Exemption 84-24 (governing purchases of shares in investment companies) and Prohibited Transaction Exemption 75-1 (covering sales of securities). Due to the complexity of these rules and the penalties for noncompliance, Benefit Plans should consult with their counsel regarding the consequences of their exercise of Rights under ERISA and the Code. INFORMATION ABOUT THE FUND THE FUND. The Fund is a non-diversified, closed-end management investment company. The Fund's investment objective is total return. The Fund seeks to produce both long-term capital appreciation through investment in common stocks and income from investment in both dividend paying common stocks and fixed income securities. The Fund typically invests in securities of U.S.-based companies. See "Investment Objectives and Policies". From its inception in 1972, the Fund had been managed to provide "a high level of current income". However, in April 2002, shareholders approved a change in the Fund's investment objective to "total return". See "The Fund" in the SAI. MANAGEMENT OF THE FUND BOARD OF DIRECTORS. The Board of Directors of the Fund is responsible for overseeing the overall management and operations of the Fund. The SAI contains additional information about the Fund's directors. Subject to the general supervision of the Board of Directors, the Advisers manage the Fund's portfolio, make decisions with respect to and place orders for all purchases and sales of the Fund's securities, and maintain records relating to such purchases and sales. Stewart R. Horejsi and Carl D. Johns have been primarily responsible for the day-to-day management of the Fund's portfolio since January 23, 2002. See "Information Regarding the Advisers and Administrator" below. INFORMATION REGARDING THE ADVISERS AND ADMINISTRATOR. The Fund is co-advised by Boulder Investment Advisers, L.L.C. ("BIA") and Stewart Investment Advisers ("SIA"). BIA and SIA are collectively referred to as the "Advisers". Since January of 2002, the Advisers have been providing advisory services to the Fund and, since March of 1999, to the Boulder Total Return Fund, Inc. As of October 31, 2002, the Advisers had a total of $268.7 million in assets under management. The Fund's administrator is Fund Administrative Services, LLC ("FAS" or the "Administrator"). 18 BOULDER INVESTMENT ADVISERS, LLC. BIA was formed on April 8, 1999, as a Colorado limited liability company and is registered as an investment adviser under the Investment Advisers Act of 1940. Stewart R. Horejsi is an employee of and investment manager for both Advisers and has extensive experience managing common stocks for the Fund as well as for the Horejsi Affiliates and other family interests. The members of BIA are Evergreen Atlantic, LLC, whose address is 1680 38th Street, Suite 800, Boulder, Colorado 80301 and the Lola Brown Trust No. 1B, whose address is PO Box 801, Yankton, South Dakota 57078 (the "Members"). The Members each hold a 50% interest in BIA. The Members are "affiliated persons" of the Fund (as that term is defined in the 1940 Act). Both Mr. Horejsi and Susan Ciciora, Mr. Horejsi's daughter and one of the Fund's "interested" directors, are discretionary beneficiaries under the Lola Brown Trust No. 1B as well as under other Horejsi family affiliated trusts which own Evergreen Atlantic, LLC. Accordingly, as a result of this relationship, both Mr. Horejsi and Ms. Ciciora may directly or indirectly benefit from the relationship between the Fund and BIA. STEWART INVESTMENT ADVISERS. SIA (or Stewart West Indies Trading Company, Ltd. d/b/a Stewart Investment Advisers) is a Barbados international business company, incorporated on November 12, 1996, and is wholly owned by the Stewart West Indies Trust, an irrevocable South Dakota trust, established by Mr. Horejsi in 1996 primarily to benefit his issue (the "West Indies Trust"), whose address is PO Box 801, Yankton, South Dakota 57078. Mr. Horejsi is not a beneficiary under the West Indies Trust. However, Susan Ciciora, Mr. Horejsi's daughter and one of the Fund's "interested" directors, as well as members of her family, are discretionary beneficiaries under the West Indies Trust and thus, as a result of this relationship, may directly or indirectly benefit from the relationship between SIA and the Fund. SIA is not domiciled in the United States and substantially all of its assets are located outside the United States. As a result, it may be difficult to realize judgments of courts of the United States predicated upon civil liabilities under federal securities laws of the United States. The Fund has been advised that there is substantial doubt as to the enforceability in Barbados of such civil remedies and criminal penalties as are afforded by the federal securities laws of the United States. Pursuant to the advisory agreement between SIA and the Fund, SIA has appointed the Secretary of the Fund (i.e., presently Stephanie Kelley in Boulder, Colorado) as its agent for service of process in any legal action in the United States, thus subjecting it to the jurisdiction of the United States courts. PORTFOLIO MANAGERS. Stewart R. Horejsi is an employee of both BIA and SIA. He is the primary investment manager and, together with Carl D. Johns (see below), the Fund's Vice President and Treasurer, is responsible for the day-to-day management of the Fund's assets and is primarily responsible for the Fund's asset allocation. Mr. Horejsi was a director of the Boulder Total Return Fund, Inc. until November, 2001; General Manager, Brown Welding Supply, LLC (sold in 1999), since April 1994; Director, Sunflower Bank (resigned); and the President or Manager of various subsidiaries of the Horejsi Affiliates since June 1986. Mr. Horejsi has been the investment adviser for various Horejsi Affiliates since 1982. Mr. Horejsi has been the Director and President of the Horejsi Charitable Foundation, Inc. since 1997. Mr. Horejsi received a Masters Degree in Economics from Indiana University in 1961 and a Bachelor of Science Degree in Industrial Management from the University of Kansas in 1959. Carl D. Johns, the Fund's Vice President and Treasurer, is also Vice President and Treasurer for BIA and, together with Mr. Horejsi, is responsible for the Fund's fixed income portfolio and BIA's day-to-day advisory activities. Mr. Johns received a Bachelors degree in Mechanical Engineering at the University of Colorado in 1985, and a Masters degree in Finance from the University of Colorado in 1991. He worked at Flaherty & Crumrine, Incorporated, from 1992 to 1998. During that period he was an Assistant Treasurer for the Preferred Income Fund Incorporated, the Preferred Income Opportunity Fund Incorporated, and the Preferred Income Management Fund. Since 1999, he has been Chief Financial Officer, Chief Accounting Officer, Vice President and Treasurer of the Boulder Total Return Fund, Inc. FUND ADMINISTRATIVE SERVICES, LLC. FAS (formerly Boulder Administrative Services, L.L.C.) is a Colorado limited liability company whose principal place of business is 1680 38th Street, Suite 800, Boulder, Colorado 80301. The members of FAS are Lola Brown Trust No. 1B (50%) and Evergreen Atlantic, L.L.C. (50%) (the "Members"). The officers of FAS are Stephen C. Miller, manager; Carl Johns, assistant manager; Laura Rhodenbaugh, secretary/treasurer; and Stephanie Kelley, assistant secretary. Since January of 2002, FAS has been providing certain administrative and executive management services to the Fund and, since March of 1999, to the Boulder Total Return Fund, Inc. THE INVESTMENT CO-ADVISORY AGREEMENTS. The Advisers and the Fund are parties to investment co-advisory agreements dated as of April 26, 2002 (the "Advisory Agreements"). Under the terms of the Advisory Agreements, the Advisers provide advisory services regarding asset allocation, manage the investment of the Fund's assets and provide such investment research, advice and supervision, in conformity with the Fund's investment objective and 19 policies, as necessary for the operations of the Fund. The Advisory Agreements provide, among other things, that the Advisers will bear all expenses in connection with the performance of their services under the Advisory Agreements, although the Fund will bear certain other expenses to be incurred in its operation, including organizational expenses, taxes, interest, brokerage costs and commissions and stock exchange fees; fees of Directors of the Fund who are not also officers, directors or employees of the Advisers; Securities and Exchange Commission fees; state Blue Sky qualification fees; insurance premiums; outside auditing and legal expenses; costs of maintenance of the Fund's existence; membership fees in trade associations; stock exchange listing fees and expenses; and litigation and other extraordinary or non-recurring expenses. The Advisory Agreements provide that the Fund shall pay to the Advisers for their services an aggregate monthly fee at the annual rate of 1.25% of the Fund's average monthly net asset value (the "Adviser Fee") (including the principal amount of leverage, if any). Under the terms of the Advisory Agreements, the Advisers split the Adviser Fee as determined by the Advisers and approved by the Board from time to time. Presently, the Adviser Fee is split between BIA and SIA 35% and 65%, respectively. Although the Advisers intend to devote such time and effort to the business of the Fund as is reasonably necessary to perform their respective duties to the Fund, the services of the Advisers are not exclusive and the Advisers may provide similar services to other investment companies and other clients and may engage in other activities. The Advisory Agreements provide that the Advisers shall not be liable for any error of judgment or mistake of law or omission or any loss suffered by the Fund in connection with the matters to which the agreements relate, although the agreements do not protect or purport to protect the Advisers against any liability to the Fund to which the Advisers would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence on their part in the performance of their duties or from reckless disregard by them of their obligations and duties under the agreements. Each Advisory Agreement also provides for indemnification by the Fund of the Advisers and their partners, members, officers, employees, agents and control persons for liabilities incurred by them in connection with their services to the Fund, subject to certain limitations and conditions. Each Advisory Agreement will continue in effect without a term so long as its continuation is specifically approved at least annually by both (i) the vote of a majority of the Board or the vote of a majority of the outstanding voting securities of the Fund (as such term is defined in the 1940 Act) and (ii) by the vote of a majority of the directors who are not parties to such Advisory Agreement or interested persons (as such term is defined in the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting on such approval. Any of the Advisory Agreements may be terminated as a whole at any time by the Fund, without the payment of any penalty, upon the vote of a majority of the Board or a majority of the outstanding voting securities of the Fund or by the Advisers on 60 days' written notice by either party to the other. Except as otherwise provided by order of the SEC or any rule or provision of the 1940 Act, all of the Advisory Agreements will terminate automatically in the event of their assignment (as such term is defined in the 1940 Act and the rules thereunder). ADMINISTRATION AGREEMENT. The Fund and FAS (Fund Administrative Services, L.L.C.) (also referred to as the "Administrator") are parties to an Administration Agreement dated January 23, 2002 (the "Administration Agreement"). FAS is owned by the Members, who, as indicated above, are also the owners of BIA and are included in the group referred to herein as the Horejsi Affiliates. FAS is headquartered at 200 S. Santa Fe, #4, PO Box 6043, Salina, KS 67401 and has offices in Colorado at 1680 38th Street, Suite 800, Boulder, Colorado 80301. As previously mentioned, both Mr. Horejsi and Ms. Ciciora, one of the Fund's "interested" directors, are discretionary beneficiaries under the Lola Brown Trust No. 1B, one of the Members of FAS, and under the trusts who own Evergreen Atlantic, LLC, the other Member of FAS. Under the Administration Agreement, FAS provides administrative, accounting oversight, executive management and certain other services to the Fund including: providing the Fund's principal offices in Colorado and executive officers, overseeing the operations of the Fund, overseeing and administering all contracted service providers, making recommendations to the Board regarding policies of the Fund, conducting shareholder relations, authorizing expenses and other tasks. In addition, FAS is responsible for engaging service providers for and paying all fees associated with Fund's transfer agency and custody requirements. FAS currently delegates the provision of accounting and certain administrative services to third parties. Pursuant to the Administration Agreement, the Fund pays FAS a monthly fee, calculated at an annual rate of .30% of the value of the Fund's average monthly net assets. As previously mentioned, pursuant to the Administration Agreement, FAS pays and is solely responsible for custody and transfer agency fees incurred by the Fund, as well as the fees payable to any third parties retained by it to provide services to the Fund. USE OF PROCEEDS INVESTMENT OPPORTUNITIES. Management estimates the net proceeds of the Offering to be approximately $28.6 million based on an Estimated Subscription Price of $5.09 per share, assuming the Offering is fully subscribed and the expenses related to the Offering are approximately $229,225. The foregoing estimates are based on the closing price of the Fund's shares on November 15, 2002. Accordingly, the assumptions and projections contained in this Prospectus are 20 subject to change significantly depending on changes in market conditions for the Fund's shares and performance of the Fund's portfolio. As of the date of this Prospectus, the Fund is fully invested in accordance with its investment objective. As of November 15, 2002, 96.8% of the Fund's assets are invested in common stocks or corporate bonds consistent with the Fund's objective. The Advisers have indicated that, at the present time, the market offers some attractive investment opportunities that, in some instances, have not existed for years and which, if taken advantage of, could yield positive results to shareholders over the long term. The Advisers have indicated that, if the Offering is implemented as contemplated by this Prospectus, there should be ample opportunities in which to invest the proceeds of the Offering within 120 days of receipt. The Advisers have agreed to waive one-half of any advisory fees which would be charged against the uninvested proceeds from the Offering until such time as 50% of the proceeds have been invested in common stock equities, which include shares of real estate investment trusts and investment companies, in accordance with the Fund's investment objective. BENEFIT TO THE ADVISERS AND ADMINISTRATOR. The Advisers and the Administrator will benefit from the Offering because their fees are based on the average net assets of the Fund. It is not possible to state precisely the amount of additional compensation the Advisers and Administrator will receive as a result of the Offering because the proceeds of the Offering will be invested in additional portfolio securities which will fluctuate in value. However, if all Rights are exercised at the Estimated Subscription Price of $5.09 (i.e., the estimated subscription price based on the Fund's NAV and share price on November 15, 2002), the annual compensation to be received by the Advisers and Administrator would be increased by approximately $446,000. This does not reflect the impact of the expense reimbursement agreement by the Administrator and the initial fee waiver by the Advisers (see "Effect of Offering on Expense Ratio" above and "Use of Proceeds" below). Two of the Fund's Directors who voted to recommend the Offering to shareholders are "interested persons" of the Advisers within the meaning of the 1940 Act. One of these Directors, Susan L. Ciciora, could benefit indirectly from the Offering because of her beneficial interest in the Advisers and the Administrator. See "Information Regarding the Advisers and Administrator" above. While it was cognizant of the benefit to the Advisers and Administrator and indirect benefit to Ms. Ciciora, the Board nevertheless concluded that the Offering was in the best interest of shareholders. The Fund may, in the future and at its discretion, choose to make additional rights offerings from time to time for a number of shares and on terms which may or may not be similar to the Offering. Any such future rights offerings will be made in accordance with the 1940 Act. Under the laws of Maryland, the state in which the Fund is incorporated, under certain circumstances, the Board is authorized to approve rights offerings without obtaining shareholder approval. The staff of the SEC has interpreted the 1940 Act as not requiring shareholder approval of a rights offering at a price below the then current net asset value so long as certain conditions are met, including a good faith determination by the fund's board of directors that such offering would result in a net benefit to existing shareholders. Such future offerings would similarly benefit the Advisers and Administrator. EXPENSES OF THE FUND. The Fund will pay all of its expenses, including fees of the directors not affiliated with the Advisers and board meeting expenses; fees of the Advisers and Administrator; interest charges; franchise and other taxes; organizational expenses; charges and expenses of the Fund's legal counsel and independent accountants; expenses of repurchasing shares; expenses of issuing any preferred shares or indebtedness; expenses of printing and mailing share certificates, stockholder reports, notices, proxy statements and reports to governmental offices; brokerage and other expenses connected with the execution, recording and settlement of portfolio security transactions; expenses connected with negotiating, effecting purchase or sale, or registering privately issued portfolio securities; expenses of calculating and publishing the net asset value of the Fund's shares; expenses of membership in investment company associations; expenses of fidelity bonding and other insurance expenses including insurance premiums; expenses of shareholders meetings; SEC and state registration fees; New York Stock Exchange listing fees; and fees payable to the National Association of Securities Dealers, Inc. in connection with this Offering and fees of any rating agencies retained to rate any preferred shares issued by the Fund. MARKET PRICE AND NET ASSET VALUE INFORMATION The Fund's Common Stock is publicly held and is listed and traded on the NYSE. The following table sets forth, for the periods indicated, the high and low closing sales prices for the shares on the NYSE, the net asset values per share that immediately preceded the high and low closing sales prices, and the discount or premium that each sales price represented as a percentage of the preceding net asset value: 21 Boulder Growth & Income Fund, Inc.(1) Share Price Data
NAV of Fund Low Closing NAV of Fund High Closing Preceding High Premium/Discount Sales Preceding Low Discount as % Quarter Ended Sales Price(2) Sales Price as % of NAV Price(2) Sales Price of NAV - -------------------- ----------------- ---------------- ------------------ -------------- --------------- --------------- 9/30/2002 $6.65 $7.15 -7.0% $5.21 $6.49 -19.7% 6/30/2002 $7.90 $8.09 -2.3% $6.40 $7.66 -16.4% 3/31/2002 $8.09 $8.29 -2.4% $7.22 $8.11 -11.0% 12/31/2001 $8.29 $8.50 -2.5% $7.61 $8.38 -9.2% 9/30/2001 $8.80 $8.83 -0.3% $7.71 $8.25 -6.5% 6/30/2001 $8.85 $8.75 1.1% $8.21 $8.61 -4.6% 3/31/2001 $9.02 $9.03 -0.1% $8.45 $8.75 -3.4% 12/31/2000 $8.56 $8.51 0.6% $7.94 $8.51 -6.7%
(1) Prior to April 26, 2002, the name of the Fund was USLife Income Fund, Inc. (2) As reported by the NYSE INVESTMENT OBJECTIVE AND POLICIES INVESTMENT OBJECTIVE. The Fund's investment objective is total return. The Fund seeks to produce both long-term capital appreciation through investment in common stocks and income from investments in both dividend paying common stocks and income producing securities such as the common stocks of utilities, closed end funds ("RICs"), real estate investment trusts ("REITs"), as well as U.S. Government securities, preferred stocks and bonds. No assurance can be given that the Fund will achieve its investment objective. INVESTMENT POLICIES. The Fund operates as a "non-diversified" investment company, as defined in the 1940 Act. As a result of being "non-diversified", with respect to 50% of the Fund's portfolio, the Fund must limit to 5% the portion of its assets invested in the securities of a single issuer. There are no such limitations with respect to the balance of the Fund's portfolio, although no single investment can exceed 25% of the Fund's total assets at the time of purchase. The Fund intends to concentrate its common stock investments in a few issuers and to take large positions in those issuers, consistent with being a "non-diversified" fund. As a result, the Fund is subject to a greater risk of loss than a diversified fund or a fund that has diversified its investments more broadly. Taking larger positions is also likely to increase the volatility of the Fund's net asset value reflecting fluctuation in the value of large Fund holdings. Under normal market conditions, the Fund intends to invest at least 80% of its net assets in common stocks. Common stocks include dividend-paying closed-end funds and REITs. The portion of the Fund's assets that are not invested in common stocks may be invested in fixed income securities, cash equivalents and income-producing common stocks. The term "income-producing common stocks" includes RICs whose objective is income, REITs and other dividend-paying common stocks; while the term "fixed income securities" includes bonds, U.S. Government securities, notes, bills, debentures, preferred stocks, convertible securities, bank debt obligations, repurchase agreements and short-term money market obligations. The Fund may, for temporary defensive purposes, allocate a higher portion of its assets to cash and cash equivalents. For this purpose, cash equivalents consist of short-term (less than twelve months to maturity) U.S. Government securities, certificates of deposit and other bank obligations, investment grade corporate bonds and other debt instruments, and repurchase agreements. Under normal circumstances, the Fund will not have more than 10% of its assets in cash or cash equivalents. The Fund's portfolio currently is, and the Fund expects it to continue to be, invested primarily in common stocks. Under the 1940 Act, the Fund must limit to 10% the portion of its assets invested in RICs and, absent an amendment to the Fund's industry concentration policy, must limit to 25% the portion of its assets invested in REITs or any other industry. Each of these percentage limitations is calculated at the time of investment, and the Fund will not be required to dispose of assets if holdings increase above these levels due to appreciation. The volatility of common stock prices has historically been greater than fixed-income securities, and as the Fund has shifted a greater portion of its assets into common stocks, the volatility of the Fund's net asset value has also increased. The time horizon for the Fund to achieve its objective of total return will likely be longer than for a fund that invests solely for income. 22 Except for the Fund's investment objective and the Fund's fundamental investment restrictions described in the SAI, the percentage limitations and investment policies set forth in this Prospectus can be changed by the Board of Directors without shareholder approval. OTHER INVESTMENT TECHNIQUES. The Fund may engage in other types of transactions, including, but not limited to investment in restricted and illiquid securities, other closed-end investment companies or REITs, repurchase agreements, when-issued and forward commitment transactions, borrowing, securities lending and other transactions. For a description of such types of transactions, see "Investment Policies and Techniques" and "Other Investment Policies and Techniques" in the SAI. RISKS ASSOCIATED WITH THE FUND'S INVESTMENTS. Risk is inherent in all investing. Investing in any investment company security involves risk, including the risk that you may receive little or no return on your investment or that you may lose part or all of your investment. Therefore, before investing you should consider carefully the following risks that you assume when you invest in the Fund through the Offering. INVESTMENTS IN COMMON STOCKS. The Fund expects to invest, under normal market conditions, in excess of 80% of its assets in publicly traded common stocks. Common stocks generally have greater risk exposure and reward potential over time than bonds. The volatility of common stock prices has historically been greater than bonds, and as the Fund invests primarily in common stocks, the Fund's net asset value may also be volatile. Further, because the time horizon for the Fund's investments in common stock is longer, the time necessary for the Fund to achieve its objective of total return will likely be longer than for a fund that invests solely for income. The Fund presently has invested a significant percentage of its portfolio in low-dividend or non-dividend paying common stocks such as Berkshire Hathaway, Inc. The Fund will not generate income at its historic levels, thus resulting in a decreased distribution of investment income to the holders of the Fund's common stock. As of November 15, 2002, the Fund held 144 Berkshire Hathaway, Inc. "A" shares. At the time of investment, this represented less than 25% of the Fund's assets. However, primarily because of depreciation of other assets in the Fund, as of November 15, 2002, these positions represented 29.8% of the Fund's assets. The Advisers do not currently intend to liquidate any portion of the Fund's position in Berkshire Hathaway, Inc. Though not an insurance company itself, Berkshire Hathaway owns Geico Insurance and General Re Insurance companies, and therefore derives a significant portion of its income, and its value, from these two insurance companies. The insurance business can be significantly affected by interest rates as well as price competition within the industry. In addition, an insurance company may experience significant changes in its year to year operating performance based both on claims paid and on performance of invested assets. Insurance companies can also be affected by government regulations and tax laws, which may change from time to time. A significant decline in the market price of Berkshire Hathaway, Inc. or any other company in which the Fund has made a significant common stock investment (i) would result in a significant decline in the Fund's NAV, (ii) may result in a proportionate decline in the market price of the Fund's common shares, and (iii) may result in greater risk and market fluctuation than a fund that has a more diversified portfolio. INVESTMENTS IN REAL ESTATE INVESTMENT TRUSTS. REITs, or Real Estate Investment Trusts, are companies dedicated to owning, and usually operating, income producing real estate, or to financing real estate. The Fund may invest up to 25% of its assets in REIT securities. The Fund intends to invest in REIT securities primarily for income. As of November 15, 2002, the Fund had 19.3% of its assets invested in REITs. There are risks associated with investing in REITs, including the potential for loss of value if the underlying properties in which the REIT invests decline in value. Property valuations may rise and fall with either the local economy conditions or with the national economy. Furthermore, the dividend income paid out by the REIT may be reduced or eliminated. INVESTMENTS IN OTHER REGISTERED INVESTMENT COMPANIES. The Fund may invest up to 10% of its assets in other investment companies registered under the 1940 Act. The Fund may, from time to time, invest in other closed-end RICs when market conditions seem appropriate to the Advisers. As of November 15, 2002, the Fund had 0% of its assets invested in RICs. The Fund intends to normally invest in RICs that pay dividends, although it is not limited to such RICs. There are risks associated with investments in RICs, including the risk that the dividend paid by the RIC could be reduced or eliminated. As a shareholder in another fund, the Fund will bear its ratable share of that fund's expenses, including management fees, and will remain subject to the Fund's advisory and administrative fees with respect to the assets so invested. INVESTMENTS IN BONDS. As of November 15, 2002 bonds constituted approximately 5.2% of the Fund's assets. This ratio is down significantly from January 23, 2002 (the date the Advisers were engaged to manage the Fund's portfolio) when the Fund held almost 100% of its assets in corporate bonds. Corporate bonds may be substantially less liquid than many other securities such as common stocks or U.S. Government securities. In addition, bonds purchased by the Fund may be subject to risk with respect to the issuing entity and to market 23 fluctuations. In particular, such bonds may be subject to "credit risk" which refers to an issuer's ability to make timely payments of interest and principal. The Fund does not expect to make substantial investments in securities rated less than investment grade. Lower-quality fixed-income securities in the Fund's portfolio may be subject to greater risk than higher rated securities. INVESTMENT PHILOSOPHY. COMMON STOCKS. With respect to the common stock portfolio (other than common stocks purchased primarily for their income-producing potential), the Advisers use an "intrinsic value" approach to selecting and managing the Fund's assets. The Advisers define intrinsic value as the discounted value of the cash that can be taken out of a business during its remaining life. Accordingly, in its securities selection process, the Advisers put primary emphasis on analysis of balance sheets, cash flows, the quality of management and their ability to efficiently and effectively allocate capital, various internal returns which indicate profitability, and the relationships that these factors have to the price of a given security. The intrinsic value approach is based on the belief that the securities of certain companies may sell at a discount from the Advisers' estimate of such companies' "intrinsic value". The Advisers will attempt to identify and invest in such securities, with the expectation that such value discount will narrow over time and thus provide capital appreciation for the Fund. CASH AND CASH EQUIVALENTS. As of November 15, 2002, the Fund had a cash position equal to 3.2% of assets, including investments in U.S. Treasury securities. Under normal market conditions, the Fund's cash position will typically be less than 20% of the Fund's total assets. FIXED INCOME INVESTMENTS. In seeking its total return objective, the Fund may invest a portion of its assets in U.S. Treasuries, preferred stocks, bonds and other income producing securities. In selecting individual investments, the Advisers will consider, among other things, current yield, price variability and the underlying fundamental characteristics of the issuer, with particular emphasis on debt to equity and debt coverage ratios. DIVIDENDS AND DISTRIBUTIONS. Prior to the Fund's change in objective to "total return" in April 2002, it was the Fund's policy to make quarterly dividend distributions. However, with the change in the Fund's objective to "total return", and its ability to invest in non-dividend paying common stocks, the Board resolved to make only annual distributions to holders of its common stock. Accordingly, dividends from net investment income, if any, will be declared and paid annually. Shares issued in connection with the Offering will receive dividends in the same manner and same proportions as any other shares of the Fund. Any net realized short-term capital gains will be distributed to shareholders at least annually. Any net realized long-term capital gains may be distributed to shareholders at least annually or may be retained by the Fund as determined by the Board. Capital gains retained by the Fund are subject to tax at the corporate tax rate. Subject to the Fund qualifying as a registered investment company, any taxes paid by the Fund on such net realized long-term gains may be used by the Fund's shareholders as a credit against their own tax liabilities. The Fund qualified during its last taxable year as a "regulated investment company" under the Internal Revenue Code of 1986, as amended (the "Code") and intends to continue to so qualify. This qualification relieves the Fund of liability for federal income taxes to the extent the Fund's earnings are distributed in accordance with the Code. Qualification as a regulated investment company under the Code for a taxable year requires, among other things, that the Fund distribute to its shareholders an amount equal to at least 90% of its investment company taxable income for such taxable year (before taking into account the deduction for such distributions). In general, the Fund's investment company taxable income will be its taxable income, including dividends, interest and the excess, if any, of net short-term capital gain over net long-term capital loss, subject to certain adjustments, and excluding the excess, if any, of net long-term capital gain for the taxable year over net short-term capital loss. Distributions by the Fund are taxable to the shareholders to the extent paid out of the Fund's current or accumulated earnings and profits, regardless of whether such distributions are received in cash or reinvested in additional shares of common stock. Such distributions constitute ordinary income to the shareholders except to the extent they are designated as capital gain dividends, as discussed below. Any distributions by the Fund, if any, in excess of its current and accumulated earnings and profits would constitute a nontaxable return of capital to shareholders to the extent of each shareholder's tax basis in his or her shares (causing a reduction of such basis), and thereafter, to the extent of any excess over such basis, capital gain. The dividends received deduction for corporations which own shares in the Fund will apply to ordinary income distributions from the Fund to the extent of such shareholders' ratable share of the total qualifying dividends received by the Fund from domestic corporations for the taxable year. The Fund intends to designate as capital gain dividends any distributions by the Fund of the excess of net long-term capital gain over net short-term capital loss. Such capital gain dividends will be taxable to shareholders as long-term capital gain, regardless of how long the shareholder has held the shares and whether such distributions are received in cash or reinvested in additional shares of common stock. Such distributions are not eligible for the dividends received deduction for corporations. 24 To the extent that the Fund distributes amounts in a given year that exceed the Fund's investment company taxable income and excess of net long-term capital gain over net short-term capital loss (after taking into account capital loss carryovers), such excess distributions may nonetheless cause shareholders to recognize taxable income under the federal income tax principles described above. Shareholders will be advised at least annually as to the federal income tax consequences of distributions made each year. Dividends declared during any month of any year payable to shareholders of record as of a specified date in such month will be deemed to have been received by shareholders and paid by the Fund on December 31 of such year if such dividends are actually paid during January of the following year. Prior to purchasing shares, a purchaser should carefully consider the impact of distributions which are expected to be declared or have been declared, but have not been paid. Any such distributions, although in effect a return of capital, are subject to tax as discussed above. A taxable gain or loss may be recognized by a shareholder upon his or her sale of shares of the Fund depending upon the tax basis and their price at the time of sale. Generally, a shareholder may include brokerage costs incurred upon the purchase and/or sale of Fund shares in his or her tax basis for such shares for the purpose of determining gain or loss on a sale of such shares. Any such capital gain or loss will be long-term or short-term depending on the shareholder's holding period for the shares sold, except that any loss recognized with respect to shares held six months or less will be treated as long-term capital loss to the extent of any capital gain dividends received on those shares. The foregoing discussion summarizes some of the important federal tax considerations generally affecting the Fund and its shareholders who are U.S. citizens or residents or domestic corporations, and is not intended as a substitute for careful tax planning. Accordingly, investors in the Fund should consult their tax advisors with specific reference to their own tax situations. Shareholders are also advised to consult their tax advisors concerning state and local taxes, which may differ from the federal income taxes described above. DIVIDEND REINVESTMENT PLAN. At a meeting held on July 22, 2002, the Board determined to eliminate the Fund's Automatic Dividend Reinvestment Plan. TAXATION OF THE FUND. The Fund has qualified and elected to be taxed as a regulated investment company under Subchapter M of the Code. Accordingly, the Fund must, among other things, (a) derive in each taxable year at least 90% of its gross income (including tax-exempt interest) from dividends, interest, payments with respect to certain securities loans, and gains from the sale or other disposition of stock, securities or foreign currencies, or other income (including but not limited to gains from options, futures and forward contracts) derived with respect to its business of investing in such stock, securities or currencies; and (b) diversify its holdings so that, at the end of each quarter of the Fund's taxable year (i) at least 50% of the market value of the Fund's total assets is represented by cash and cash items, U.S. Government securities, the securities of other regulated investment companies and other securities, with such other securities limited, in respect of any one issuer, to an amount not greater than 5% of the value of the Fund's total assets and to not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the market value of the Fund's total assets is invested in the securities of any one issuer (other than U.S. Government securities and the securities of other regulated investment companies) or of any two or more issuers that the Fund controls and which are determined to be engaged in the same trade or business or similar or related trades or businesses. As a regulated investment company, the Fund generally is not subject to U.S. federal income tax on income and gains that it distributes each taxable year to its shareholders, if at least 90% of the sum of the Fund's (i) investment company taxable income (which includes, among other items, dividends, interest and any excess of net short-term capital gains over net long-term capital losses and other taxable income other than any net capital gain (as defined below) reduced by deductible expenses) determined without regard to the deduction for dividends paid and (ii) its net tax-exempt interest (the excess of its gross tax-exempt interest over certain disallowed deductions). The Fund intends to distribute at least annually substantially all of such income. Amounts not distributed on a timely basis in accordance with a calendar-year distribution requirement are subject to a nondeductible 4% excise tax at the Fund level. To avoid this tax, the Fund must distribute during each calendar year an amount equal to the sum of (1) at least 98% of its ordinary income (not taking into account any capital gains or losses) for the calendar year, (2) at least 98% of its capital gains in excess of its capital losses (adjusted for certain ordinary losses) for a one-year period generally ending on October 31 of the calendar year (unless, an election is made by a fund with a November or December year-end to use the fund's fiscal year), and (3) certain undistributed amounts from previous years on which the Fund paid no U.S. federal income tax. While the Fund intends to distribute any income and capital gains in the manner necessary to minimize imposition of the 4% excise tax, there can be no assurance that sufficient amounts of the Fund's taxable income and capital gains will be distributed to avoid entirely the imposition of the tax. In that event, the Fund will be liable for the tax only on the amount by which it does not meet the foregoing distribution requirement. 25 If for any taxable year the Fund does not qualify as a regulated investment company, all of its taxable income (including its net capital gains) will be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and such distributions will be taxable to shareholders as ordinary dividends to the extent of the Fund's current and accumulated earnings and profits. TAXATION OF SHAREHOLDERS. Distributions paid to you by the Fund from its ordinary income or from an excess of net short-term capital gains over net long-term capital losses (together referred to hereinafter as "ordinary income dividends") are taxable to you as ordinary income to the extent of the Fund's earning and profits. Distributions made to you from an excess of net long-term capital gains over net short-term capital losses ("capital gain dividends"), including capital gain dividends credited to you but retained by the Fund, are taxable to you as long-term capital gains, regardless of the length of time you have owned your Fund shares. Distributions in excess of the Fund's earnings and profits will first reduce the adjusted tax basis of your shares and, after such adjusted tax basis is reduced to zero, will constitute capital gains to you (assuming the shares are held as a capital asset). Generally, not later than 60 days after the close of its taxable year, the Fund will provide you with a written notice designating the amount of any ordinary income dividends or capital gain dividends and other distributions. The sale or other disposition of common shares of the Fund will generally result in capital gain or loss to you, and will be long-term capital gain or loss if the shares have been held for more than one year at the time of sale. Any loss upon the sale or exchange of Fund shares held for six months or less will be treated as long-term capital loss to the extent of any capital gain dividends received (including amounts credited as an undistributed capital gain dividend) by you. A loss realized on a sale or exchange of shares of the Fund will be disallowed if other Fund shares are acquired (whether through the automatic reinvestment of dividends or otherwise) within a 61-day period beginning 30 days before and ending 30 days after the date that the shares are disposed of. In such case, the basis of the shares acquired will be adjusted to reflect the disallowed loss. Present law taxes both long-term and short-term capital gains of corporations at the rates applicable to ordinary income. For individual (non-corporate) taxpayers, however, short-term capital gains and ordinary income are taxed at a maximum rate of 38.6% for 2002 while long-term capital gains generally will be taxed at a maximum rate of 20% and 10% for taxpayers in the 15% bracket. The 20% capital gains rate and the 10% capital rate will be reduced to 18% and 8% respectively, for capital assets held for more than five years if the holding period begins after December 31, 2000. Dividends and other taxable distributions are taxable to you even though they are reinvested in additional shares of the Fund. Although the Fund does not intend to pay dividends in January, if it does pay such a dividend which was declared in the previous October, November or December to shareholders of record on a specified date in one of such months, then such dividend will be treated for tax purposes as being paid by the Fund and received by you on December 31 of the year in which the dividend was declared. The Fund intends to distribute all net investment income and any capital gains during the month of December of each year. The Fund is required in certain circumstances to backup withhold on taxable dividends and certain other payments paid to non-corporate holders of the Fund's shares who do not furnish the Fund with their correct taxpayer identification number (in the case of individuals, their Social Security number) and certain certifications, or who are otherwise subject to backup withholding. Backup withholding is not an additional tax. Any amounts withheld from payments made to you may be refunded or credited against your U.S. federal income tax liability, if any, provided that the required information is furnished to the Internal Revenue Service. The foregoing is a general and abbreviated summary of the provisions of the Code and the Treasury regulations in effect as they directly govern the taxation of the Fund and its shareholders. These provisions are subject to change by legislative or administrative action, and any such change may be retroactive. Shareholders are urged to consult their tax advisers regarding specific questions as to U.S. federal, foreign, state, local income or other taxes. STATE AND LOCAL TAX MATTERS. You should consult with your tax advisor about state and local tax matters. DETERMINATION OF NET ASSET VALUE The net asset value of common shares of the Fund is computed based upon the value of the Fund's portfolio securities and other assets. Net asset value per common share of the Fund is determined as of the close of the regular trading session on the NYSE no less frequently than Friday of each week and the last business day of each month, provided, however, that if any such day is a holiday or determination of net asset value on such day is impracticable, the net asset value is calculated on such earlier or later day as determined by the Advisers. The Fund calculates net asset value per common share of the Fund by subtracting the Fund's liabilities (including accrued expenses, dividends payable and any borrowings of the Fund) and the liquidation value of any outstanding preferred shares of the Fund from the Fund's total assets (the value of the securities the Fund holds plus cash or other assets, including interest accrued but not yet received) and dividing the result by the total number of common shares of the Fund outstanding. 26 The Fund values its common shares and corporate bonds by using market quotations provided by pricing services, prices provided by market makers or estimates of market values obtained from yield data relating to instruments or securities with similar characteristics in accordance with procedures established by the Board. Short-term securities having a maturity of 60 days or less are valued at amortized cost, which approximates market value. Any securities or other assets for which current market quotations are not readily available are valued at their fair value as determined in good faith under procedures established by and under the general supervision and responsibility of the Board. REPURCHASE OF COMMON SHARES. Shares of closed-end investment companies often trade at a discount to their net asset values, and the Fund's common shares have in the past and may in the future trade at a discount to their net asset value. The market price of the Fund's common shares is determined by such factors as relative demand for and supply of such common shares in the market, the Fund's net asset value, general market and economic conditions and other factors beyond the control of the Fund. Although the Fund's common shareholders do not have the right to have the Fund redeem their common shares, the Fund may take action, from time to time, to repurchase common shares in the open market or make tender offers for its common shares at their net asset value. This may, but will not necessarily, have the effect of reducing any market discount from net asset value. See "Repurchase of Common Stock" in the SAI. CAPITALIZATION. The Charter authorizes the issuance of 250,000,000 shares of Common Stock, par value $0.01 per share. Shareholders recently approved an amendment to the Charter which authorizes the Board, without shareholder approval, to increase the Fund's authorized capital. Pursuant to such amendment, and in connection with the Offering, the Board resolved to increase the authorized capital of the Fund to an aggregate of 250,000,000 shares and to reduce the par value to $0.01 per share. Under the Offering, the Fund will offer 5,663,892 additional shares. RIGHTS WITH REGARD TO DIVIDENDS, VOTING AND LIQUIDATION. When issued, shares of Common Stock are fully paid and non-assessable. The Fund's shares have no pre-emptive, conversion, exchange or redemption rights. Each share of Common Stock has one vote and shares equally in dividends and distributions when and if declared by the Fund and in the Fund's net assets upon liquidation. All voting rights for the election of directors are non-cumulative. Consequently, the holders of more than 50% of the shares can elect 100% of the directors then nominated for election if they choose to do so and, in such event, the holders of the remaining shares will not be able to elect any directors. COMMON STOCK. The Fund has no present intention of offering any additional shares of common stock other than shares described herein. Any additional offerings of shares of capital stock, if made, will require approval by the Board. Any additional offering of common shares will be subject to the requirements of the 1940 Act that common shares may not be issued at a price below the then current net asset value (exclusive of underwriting discounts and commissions) except in connection with an offering to existing stockholders or with the consent of a majority of the Fund's common shareholders. The Common Stock has traded on the NYSE from between January of 1974 to April 29, 2002, under the symbol "UIF". From April 30, 2002 to the present, the Common Stock has traded on the NYSE under the symbol "BIF". On November 15, 2002, there were 5,663,892 common shares of the Fund issued and outstanding and the net asset value per common share was $6.32 and the closing price per common share on the NYSE was $5.09. PREFERRED STOCK. The Board is authorized to classify and reclassify any unissued shares of Common Stock as part of an issuance of preferred stock. The Board is also authorized to set or change the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of such shares of stock. Under the 1940 Act, the Fund is permitted to have outstanding more than one series of preferred shares so long as no single series has a priority over another series as to the distribution of assets of the Fund or the payment of dividends. Holders of common shares and outstanding preferred shares of the Fund have no preemptive right to purchase any preferred shares that might be issued. ANTI-TAKEOVER PROVISIONS OF THE CHARTER AND BY-LAWS. The Fund presently has provisions in its Charter and By-Laws (commonly referred to as "anti-takeover" provisions) which may have the effect of limiting the ability of other entities or persons to acquire control of the Fund, to cause it to engage in certain transactions or to modify its structure: o The Charter classifies the Board into three classes, each with a term of three years, with only one class of directors standing for election in any year. Such classification may prevent replacement of a majority of the directors for up to a two year period. o The Charter requires the affirmative vote of at least 75% of the votes entitled to be cast by holders of Common Stock to approve, adopt or authorize the following: (1) Any conversion from a closed-end to an open-end investment company; (2) Any merger or consolidation of the Fund with or into any other person; 27 (3) Any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any other person of any assets of the Fund except for portfolio transactions of the Fund effected in the ordinary course of the Fund's business; (4) The issuance or transfer by the Fund (in one transaction or a series of transactions) of any shares of the Fund to any other person in exchange for cash, securities or other property (or a combination thereof) excluding sales of any shares of the Fund in connection with a public offering thereof. (5) Any shareholder proposal as to specific investment decisions made or to be made with respect to the Fund's assets. o The Fund has elected to become subject to certain provisions of the Maryland General Corporation Law that may be regarded as anti-takeover provisions. Under these provisions, among other things (i) a majority of shareholders is required in order for shareholders to call a meeting of shareholders, (ii) Board members cannot be removed without cause, (iii) two-thirds of the votes entitled to be cast is necessary to remove any director, (iv) only remaining Board members can fill a vacancy on the Board resulting from an increase in the size of the Board or from the death, resignation or removal of a director and (v) directors elected by the Board to fill a vacancy serve for the full term of the class of directors in which the vacancy occurred. o The Fund's By-laws contain provisions the effect of which is to prevent matters, including nominations of Directors, from being considered at shareholders' meetings where the Fund has not received sufficient prior notice of the matters. The percentage of votes required under these provisions, which are greater than the minimum requirements under Maryland law or in the 1940 Act, make it more difficult to effect a change in the Fund's business or management and could have the effect of depriving holders of common shares of an opportunity to sell shares at a premium over prevailing market prices by discouraging a third party from seeking to obtain control of the Fund in a tender offer or similar transaction. The Board, however, has considered these anti-takeover provisions and believes they are in the best interests of shareholders. OTHER SERVICE PROVIDERS. CUSTODIAN. The Fund's securities and cash are held under a Custodial Agreement with State Street Bank and Trust Company (the "Custodian"), located at 225 Franklin Street, Boston, MA 02110, pursuant to which the Custodian holds the Fund's assets in compliance with the 1940 Act. For its services, the Custodian will receive a monthly fee based upon the average weekly value of the total assets of the Fund, plus certain charges for securities transactions. All customary fees of the Custodian are paid by the Administrator. TRANSFER AGENT. The transfer agent, dividend disbursing agent and registrar for the common shares of the Fund is Mellon Investor Services LLC. All customary fees of the transfer agent are paid by the Administrator. INDEPENDENT ACCOUNTANTS. The data in the "Financial Highlights" section of this Prospectus are based upon financial statements for the year ending June 30, 2002, that have been audited by KPMG LLP, independent accountants, located at 99 High Street, Boston, MA 02110, as indicated in their reports with respect thereto, and are incorporated by reference herein in reliance on their reports given on their authority as experts in auditing and accounting. LEGAL MATTERS. Certain legal matters will be passed on by Willkie Farr & Gallagher, New York, New York, counsel to the Fund in connection with the Offering. REPORTS TO SHAREHOLDERS. The Fund sends unaudited semiannual reports and audited annual reports, including a list of investments held, to shareholders. AVAILABLE INFORMATION. The Fund is subject to the informational requirements of the Securities Exchange Act of 1934 and the 1940 Act and in accordance therewith is required to file reports, proxy statements and other information with the SEC. Any such reports, proxy statements and other information can be inspected and copied at the public reference facilities of the SEC, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and the SEC's New York Regional Office at 233 Broadway, New York, New York 10279 and its Chicago Regional Office at Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661. Reports, proxy statements and other information concerning the Fund can also be inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005. Additional information regarding the Fund and the Offering is contained in the Registration Statement on Form N-2, including amendments, exhibits and schedules thereto, relating to such shares filed by the Fund with the SEC. This Prospectus does not contain all of the information set forth in the Registration Statement, including any amendments, exhibits and schedules thereto. For further information with respect to the Fund and the shares offered hereby, reference is made to the Registration Statement. Statements contained in this Prospectus as to the contents of any contract or other document referred to are not necessarily complete and in each instance reference is made to the copy of such contract or 28 other document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. A copy of the Registration Statement may be inspected without charge at the SEC's principal office in Washington, D.C., and copies of all or any part thereof may be obtained from the SEC upon the payment of certain fees prescribed by the SEC. The SEC maintains a web site (http://www.sec.gov) that contains the Registration Statement, other documents incorporated by reference, and other information the Fund has filed electronically with the SEC, including proxy statements and reports filed under the Securities Exchange Act of 1934. NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR THE FUND'S ADVISER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SHARES OF COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS AS SET FORTH IN THE PROSPECTUS OR IN THE AFFAIRS OF THE FUND SINCE THE DATE HEREOF. STATEMENT OF ADDITIONAL INFORMATION. Additional information about the Fund is contained in a Statement of Additional Information, which is available upon request without charge by contacting the Fund's Sub-Administrator, PFPC, Inc. at (800) 331-1710. Following is the Table of Contents for the Statement of Additional Information: STATEMENT OF ADDITIONAL INFORMATION - TABLE OF CONTENTS [Insert table Here] SUBJECT TO COMPLETION, DATED NOVEMBER 20, 2002 BOULDER GROWTH & INCOME FUND, INC. STATEMENT OF ADDITIONAL INFORMATION Boulder Growth & Income Fund, Inc. (the "Fund") is a closed-end, non-diversified management investment company. This statement of additional information does not constitute a prospectus, but should be read in conjunction with the prospectus relating hereto dated November 20, 2002 (the "Prospectus"). This Statement of Additional Information does not include all information that a prospective investor should consider before participating in the rights offering described in the Prospectus or otherwise purchasing the Fund's common stock. A copy of the Prospectus may be obtained without charge by calling the Fund's sub-administrator (PFPC, Inc.) at (800)-331-1701. You may also obtain a copy of the Prospectus on the Securities and Exchange Commission's web site (http://www.sec.gov). Capitalized terms used but not defined in this statement of additional information have the meanings given to them in the Prospectus. THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. This Statement of Additional Information is dated November 20, 2002. TABLE OF CONTENTS THE FUND....................................................................S-1 INVESTMENT OBJECTIVE AND POLICIES...........................................S-1 INVESTMENT POLICIES AND TECHNIQUES..........................................S-3 MANAGEMENT OF THE FUND......................................................S-7 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.............................S-9 OWNERSHIP OF THE FUND BY DIRECTORS..........................................S-9 DIRECTOR COMPENSATION......................................................S-10 COMMITTEES OF THE BOARD OF DIRECTORS.......................................S-11 CODES OF ETHICS............................................................S-12 BROKERAGE ALLOCATION AND OTHER PRACTICES...................................S-12 REPURCHASE OF SHARES.......................................................S-13 TAX STATUS.................................................................S-14 FINANCIAL STATEMENTS.......................................................S-15 ADDITIONAL INFORMATION.....................................................S-16 THE FUND The Fund is a non-diversified, closed-end registered investment company. The Fund's investment objective is total return. The Fund seeks to produce both long-term capital appreciation through investment in common stocks and income from both dividend paying common stocks and fixed income securities. The Fund typically invests in securities of U.S.-based companies. See "Investment Objective and Policies". From its inception in 1972, the Fund was managed to provide "a high level of current income". However, at a special shareholder meeting held in April 2002, shareholders approved a change in the Fund's investment objective to "total return" as well as a change of the Fund to non-diversified status, and eliminated or changed certain of the Fund's fundamental investment policies. See "Investment Restrictions" below. INVESTMENT OBJECTIVE AND POLICIES INVESTMENT OBJECTIVE. The Fund's investment objective is total return. The Fund seeks to produce both long-term capital appreciation through investment in common stocks and income from both dividend paying common stocks, including utilities, real estate investment trusts ("REITs"), registered closed end investment companies ("RICs") and fixed S-1 income securities, such as U.S. government securities, preferred stocks and bonds. No assurance can be given that the Fund will achieve its investment objective. The Fund is a "non-diversified" investment company, as defined in the Investment Company Act of 1940 (the "1940 Act"). As a result, with respect to 50% of the Fund's portfolio, the Fund must limit to 5% the portion of its assets invested in the securities of a single issuer. There are no such limitations with respect to the balance of the Fund's portfolio, although no single investment can exceed 25% of the Fund's total assets. The Fund intends to concentrate its common stock investments in a few issuers and to take large positions in those issuers, consistent with being a "non-diversified" fund. As a result, the Fund is subject to a greater risk of loss than a diversified fund or a fund that has diversified its investments more broadly. Taking larger positions is also likely to increase the volatility of the Fund's net asset value, reflecting fluctuation in the value of large Fund holdings. Under normal market conditions, the Fund intends to invest at least 80% of its net assets in common stocks. INVESTMENT RESTRICTIONS. A number of the Fund's investment policies have been defined as "fundamental" policies ("Fundamental Policies") by the Prospectus. No Fundamental Policy may be changed without the vote of (i) 67% or more of the shares present at a meeting, if the holders of more than 50% of the shares are present or represented by proxy, or (ii) more than 50% of the shares, whichever is less. With the exception of the Fundamental Policies, all other policies, statements, objectives, terms and conditions may be changed by the Fund's Board of Directors (the "Board") without shareholder approval. At a special shareholder meeting held on April 26, 2002, shareholders approved proposals eliminating or modifying Fundamental Policies regarding (i) prohibition on investing in REITs, (ii) prohibition on borrowing, (iii) prohibition on pledging assets, (iv) prohibition on issuing senior securities and (v) restrictions on greater-than-5% holdings in a single issuer. Presently, after elimination or modification of these policies, the Fund has the following investment restrictions. It may not: 1. Issue any senior securities except as permitted under the 1940 Act. 2. Invest in the securities of issuers conducting their principal business activity in the same industry if, immediately after such investment, the value of its investments in such industry would exceed 25% of the value of its total assets. 3. Make short sales of securities or purchase any securities on margin, except for such short-term credits as are necessary for the clearance of transactions. 4. Write, purchase or sell puts, calls, or combinations thereof provided that this shall not preclude the purchase and sale of warrants, rights and convertible securities in accordance with the Fund's policies. 5. Participate on a joint or a joint and several basis in any trading account in securities, except that the Fund may, to the extent permitted by rules, regulations or orders of the SEC, combine orders with others for the purchases and sales of securities in order to achieve the best overall execution. 6. Invest no more than 20% of its assets in foreign securities, except that the Fund may invest not more than 25% of the value of its total assets in securities of, or guaranteed by, the Government of Canada or of a Province of Canada or any instrumentality or political subdivision thereof. 7. Purchase or sell interests in oil, gas or other mineral exploration or development programs. 8. Purchase or sell real estate, except that the Fund may purchase or sell real estate investment trusts and securities secured by real estate or interests therein issued by companies owning real estate or interests therein. 9. Purchase or sell commodities or commodity contracts. 10. Make loans other than through the purchase of debt securities in private placements and the loaning of portfolio securities as described under "Investment Objective and Policies". 11. Borrow money in an amount exceeding the maximum permitted under the 1940 Act. 12. Underwrite securities of other issuers, except insofar as it may be deemed to be an underwriter in selling a portfolio security which may require registration under the Securities Act of 1933. 13. Invest more than 30% of the value of its total assets in securities which have been acquired through private placements. S-2 14. Purchase or retain the securities of any issuer, if, to the Fund's knowledge, those officers and directors of the Fund or its investment adviser who individually own beneficially more than 1/2 of 1% of the outstanding securities of such issuer, together own beneficially more than 5% of such outstanding securities. 15. Pledge, mortgage or hypothecate its assets except in connection with permitted borrowing and to the extent related to transactions in which the Fund is authorized to engage. INVESTMENT POLICIES AND TECHNIQUES The following information supplements the discussion of the Fund's investment objective, policies and techniques that are described in the Prospectus. PORTFOLIO INVESTMENTS. Under normal market conditions, the Fund invests primarily in a portfolio of common stocks and income producing securities such as utilities, REITs, RICs, bonds and preferred stocks. COMMON STOCKS. The Fund may invest all or any portion of its assets in common stock. Common stock is defined as shares of a corporation that entitle the holder to a pro rata share of the profits of the corporation, if any, without preference over any other shareholder or class of shareholders, including holders of the corporation's preferred stock and other senior equity. Common stock usually carries with it the right to vote and frequently an exclusive right to do so. Holders of common stock also have the right to participate in the assets of the corporation after all other claims are paid. In selecting common stocks for investment, the Fund expects to focus primarily on domestic United States companies, although the Fund is permitted to invest in companies outside the U.S. subject to the restriction stated above (i.e., no more than 20% of the Fund's assets may be invested in foreign companies). Generally, target companies will have a consistent high return on equity, while using modest amounts of debt relative to their industry. The Fund will seek investments in businesses the Advisers (defined below) understand, which have fairly predictable and improving future earnings, and most importantly, are priced reasonably relative to the business' earnings and anticipated growth in earnings. The Fund will not necessarily focus its investments in "large-cap", "mid-cap" or "small-cap" companies since Boulder Investment Advisers, LLC ("BIA") and Stewart Investment Advisers ("SIA") (collectively, the "Advisers") believe it would be unwise to impose such investment limitations. When the Fund makes an investment in a common stock, it will likely make a significant investment and typically hold onto it for a long period of time. In the long run, the Fund believes that value-type investing will produce the best overall total return. INVESTMENTS IN REAL ESTATE INVESTMENT TRUSTS ("REITs"). REITs, or Real Estate Investment Trusts, are companies dedicating to owning, and usually operating, income producing real estate or to financing real estate. Most REITs are trusts under Sections 856 through 860 of the Internal Revenue Code of 1986 (the "Code"). The Fund may invest up to 25% of its assets in REITs. The Fund intends to invest in REITs primarily for income. As of November 15, 2002, the Fund had 19.3% of its assets invested in REITs. There are risks associated with investing in REITs, including the potential for loss of value if the underlying properties in which the REIT invests decline in value. Property valuations may rise and fall with either the local economy conditions or with the national economy. Furthermore, the dividend income paid out by the REIT may be reduced or eliminated, depending on the income produced by the underlying properties owned by the REITs. In the normal course of business, REITs face risks that are either non-financial or non-quantifiable. These risks principally include credit risk as well as legal risk. Because most REITs are typically financed with debt instruments, they are also interest rate sensitive. INVESTMENTS IN OTHER REGISTERED INVESTMENT COMPANIES ("RICs"). The Fund may invest up to 10% of its assets in other investment companies registered under the 1940 Act. The Fund may, from time to time, invest in other closed-end RICs when they are trading at a discount, and when market conditions seem appropriate to the Advisers. As of November 15, 2002, the Fund had 0% of its assets invested in RICs. The Fund intends to normally invest in RICs that pay dividends. There are risks associated with investments in RICs, including the risk that the dividend paid by the RIC could be reduced or eliminated. Dividend paying closed-end RICs can also trade at substantial discounts to their net asset value. Such RICs typically own interest rate sensitive securities, which tend to increase in value when interest rates decline, and decrease in value when interest rates increase. RICs also have expenses associated with management of the fund. To the extent that the Fund invests in other RICs, the Fund's shareholders will indirectly be incurring expenses for both the Fund and for that portion of the Fund's assets invested in other RICs. However, even operating companies also incur expenses in their daily operations. Profits are reported net of these expenses, and RICs are no different in that respect. RICs fall under the auspices of the 1940 Act, which requires disclosure of expenses and calculation of net asset value ("NAV") net of expenses. Despite this, the Advisers deem the "double-expense" to have a minimal impact when compared to the discount at which the Fund may buy other RICs. In the case of RICs that specialize in bonds, the primary risk is interest rate risk. The NAV and market value of RICs will fluctuate with the value of the underlying assets. S-3 BONDS. Prior to April 26, 2002, the Fund was called USLife Income Fund, Inc. and was virtually 100% invested in corporate bonds. After the Fund changed its investment objective on April 26, 2002, the Advisers liquidated a substantial portion all of the Fund's bond portfolio. As of November 15, 2002, the Fund had only 5.2% of its assets invested in bonds. The Fund may continue to liquidate most of its remaining bond holdings as appropriate and does not anticipate making significant investments in bonds in the future. PREFERRED STOCKS. The Fund may invest in preferred stocks. Generally, preferred stockholders receive dividends prior to distributions on common stock and have a priority of claim over common stockholders if the issuer of the stock is liquidated. Unlike common stock, preferred stock does not usually have voting rights; preferred stock, in some instances, is convertible into common stock. The Fund may, from time to time, invest in preferred stocks that are rated investment grade by Moody's Investment Services ("Moody's") and Standard & Poor's ("S&P") at the time of investment or whose issuer's senior debt is rated investment grade by Moody's or S&P at the time of investment, although the Fund is not limited to investments in investment grade preferreds. In addition, the Fund may acquire unrated issues that the Advisers deem to be comparable in quality to rated issues in which the Fund is authorized to invest. MONEY MARKET INSTRUMENTS. Under normal conditions, the Fund may hold up to 20% of its assets in cash or money market instruments. The Fund intends to invest in money market instruments pending investments in common stocks, to serve as collateral in connection with certain investment techniques, and to hold as a reserve pending the payment of dividends to investors.. When the Advisers believe that economic circumstances warrant a temporary defensive posture, the Fund may invest without limitation in short-term money market instruments. Money market instruments that the Fund may acquire will be securities rated in the highest short-term rating category by Moody's or S&P or the equivalent from another major rating service, securities of issuers that have received such ratings with respect to other short-term debt or comparable unrated securities. Money market instruments in which the Fund typically expects to invest include: Government Securities; bank obligations (including certificates of deposit, time deposits and bankers' acceptances of U.S. or foreign banks); commercial paper rated P-l by Moody's or A-1 by S&P; and repurchase agreements. REPURCHASE AGREEMENTS. The Fund may invest temporarily, without limitation, in repurchase agreements, which are agreements pursuant to which securities are acquired by the Fund from a third party with the understanding that they will be repurchased by the seller at a fixed price on an agreed date. These agreements may be made with respect to any of the portfolio securities in which the Fund is authorized to invest. Repurchase agreements may be characterized as loans secured by the underlying securities. The Fund may enter into repurchase agreements with (i) member banks of the Federal Reserve System having total assets in excess of $500 million and (ii) securities dealers, provided that such banks or dealers meet certain creditworthiness standards established. The resale price reflects the purchase price plus an agreed upon market rate of interest which is unrelated to the coupon rate or date of maturity of the purchased security. The collateral is marked to market daily. Such agreements permit the Fund to keep all its assets earning interest while retaining "overnight" flexibility in pursuit of investments of a longer term nature. The use of repurchase agreements involves certain risks. For example, if the seller of securities under a repurchase agreement defaults on its obligation to repurchase the underlying securities, as a result of its bankruptcy or otherwise, the Fund will seek to dispose of such securities, which action could involve costs or delays. If the seller becomes insolvent and subject to liquidation or reorganization under applicable bankruptcy or other laws, the Fund's ability to dispose of the underlying securities may be restricted. Finally, it is possible that the Fund may not be able to substantiate its interest in the underlying securities. To minimize this risk, the securities underlying the repurchase agreement will be held by the custodian at all times in an amount at least equal to the repurchase price, including accrued interest. If the seller fails to repurchase the securities, the Fund may suffer a loss to the extent proceeds from the sale of the underlying securities are less than the repurchase price. GOVERNMENT SECURITIES. The Fund may invest in government securities that include direct obligations of the United States and obligations issued by U.S. Government agencies and instrumentalities ("Government Securities"). Included among direct obligations of the United States are Treasury Bills, Treasury Notes and Treasury Bonds, which differ principally in terms of their maturities. Also included among the securities issued by U.S. Government agencies and instrumentalities are: securities that are supported by the full faith and credit of the United States (such as Government National Mortgage Association certificates); securities that are supported by the right of the issuer to borrow from the U.S. Treasury (such as securities of Federal Home Loan Banks); and securities that are supported by the credit of the instrumentality (such as Federal National Mortgage Association and Federal Home Loan Mortgage Corporation bonds). ZERO COUPON SECURITIES. The Fund may invest up to 10% of its total assets in zero coupon securities issued by the U.S. Government, its agencies or instrumentalities as well as custodial receipts or certificates underwritten by securities dealers or banks that evidence ownership of future interest payments, principal payments or both on certain government securities. Zero coupon securities pay no cash income to their holders until they mature and are issued at S-4 substantial discounts from their value at maturity. When held to maturity, their entire return comes from the difference between their purchase price and their maturity value. Because interest on zero coupon securities is not paid on a current basis, the values of securities of this type are subject to greater fluctuations than are the values of securities that distribute income regularly and may be more speculative than such securities. Accordingly, the values of these securities may be highly volatile as interest rates rise or fall. In addition, the Fund's investments in zero coupon securities will result in special tax consequences. Although zero coupon securities do not make interest payments, for tax purposes a portion of the difference between a zero coupon security's maturity value and its purchase price is taxable income of the Fund each year. Custodial receipts evidencing specific coupon or principal payments have the same general attributes as zero coupon Government Securities but are not considered to be Government Securities. Although typically under the terms of a custodial receipt the Fund is authorized to assert its rights directly against the issuer of the underlying obligation, the Fund may be required to assert through the custodian bank such rights as may exist against the underlying issuer. Thus, in the event the underlying issuer fails to pay principal and/or interest when due, the Fund may be subject to delays, expenses and risks that are greater than those that would have been involved if the Fund had purchased a direct obligation of the issuer. In addition, in the event that the trust or custodial account in which the underlying security has been deposited is determined to be an association taxable as a corporation, instead of a non-taxable entity, the yield on the underlying security would be reduced in respect of any taxes paid. BORROWINGS. The Fund reserves the right to borrow funds to the extent permitted by its Fundamental Policies. See "Investment Restrictions" above. The proceeds of borrowings may be used for any valid purpose including, without limitation, liquidity, investing and repurchases of capital stock of the Fund. Borrowing is a form of leverage and, in that respect, entails risks, including volatility in net asset value, market value and income available for distribution. LENDING OF SECURITIES. The Fund is authorized to lend securities it holds to brokers, dealers and other financial organizations, although it has no current intention of doing so. Loans of the Fund's securities, if and when made, may not exceed 33-1/3% of the Fund's assets taken at value. The Fund's loans of securities will be collateralized by cash, letters of credit or Government Securities that will be maintained at all times in a segregated account with the Fund's custodian in an amount at least equal to the current market value of the loaned securities. From time to time, the Fund may pay a part of the interest earned from the investment of collateral received for securities loaned to the borrower and/or a third party that is unaffiliated with the Fund and that is acting as a "finder." By lending its portfolio securities, the Fund can increase its income by continuing to receive interest on the loaned securities, by investing the cash collateral in short-term instruments or by obtaining yield in the form of interest paid by the borrower when Government Securities are used as collateral. The risk in lending portfolio securities, as with other extensions of credit, consists of the possible delay in recovery of the securities or the possible loss of rights in the collateral should the borrower fail financially. The Fund will adhere to the following conditions whenever it lends its securities: (i) the Fund must receive at least 100% cash collateral or equivalent securities from the borrower, which will be maintained by daily marking-to-market; (ii) the borrower must increase the collateral whenever the market value of the securities loaned rises above the level of the collateral; (iii) the Fund must be able to terminate the loan at any time; (iv) the Fund must receive reasonable interest on the loan, as well as any dividends, interest or other distributions on the loaned securities and any increase in market value; (v) the Fund may pay only reasonable custodian fees in connection with the loan; and (vi) voting rights on the loaned securities may pass to the borrower, except that, if a material event adversely affecting the investment in the loaned securities occurs, the Board must terminate the loan and regain the Fund's right to vote the securities. OTHER INVESTMENT TECHNIQUES AND POLICIES LEVERAGE. At a Special Meeting held in April 2002, shareholders approved the elimination or modification of certain of the Fundamental Policies, thus allowing the Fund to leverage its portfolio. At the annual meeting on October 1, 2002, shareholders approved an amendment to the Charter that would permit the Fund to issue preferred stock which could be used to leverage the portfolio. Management believes that well-managed leverage can have a beneficial effect on shareholders' total return. If properly managed, leverage can provide enough additional income to pay a substantial portion S-5 of Fund expenses, if there is enough of a positive spread between the borrowed money and the return on the assets acquired with such moneys. Although the Fund will likely focus its use of leverage on producing income, the Fund may also purchase other income producing securities (e.g., RICs, REITs and dividend-paying common stocks) or non-dividend-paying common stocks for long-term appreciation. The Fund is limited in its use of leverage to the maximum amount permitted by law, which is the limit contained in Section 18 of the 1940 Act. The Fund would leverage through the issuance of preferred stock or borrowing. Depending on how leverage might be structured, the leverage may, in certain circumstances, require shareholder approval. Presently, although there are no current proposals for leveraging the Fund, upon consideration and approval by the Board, the Fund can borrow from banks, institutions or other entities, such as through margin purchases or reverse repurchase agreements. RISKS ASSOCIATED WITH LEVERAGE. The Fund is authorized to borrow money from banks and other entities in an amount equal to up to 33-1/3% of the Fund's total assets (including the amount borrowed), less all liabilities and indebtedness other than the borrowing, and may use the proceeds of the borrowings for investment purposes. Borrowings create leverage, which is a speculative characteristic. Although the Fund may borrow continuously, it will do so only when management believes that borrowing will benefit the Fund after taking into account considerations such as the costs of the borrowing and the likely investment returns on the securities purchased with the borrowed monies. The extent to which the Fund will borrow will depend upon the availability of credit. No assurance can be given that the Fund will be able to borrow on terms acceptable to the Fund. Borrowing by the Fund will create an opportunity for increased return but, at the same time, will involve special risk considerations. Leveraging resulting from borrowing will magnify declines as well as increases in the net asset value of the Common Stock and in the net return on the Fund's portfolio. Although the principal of the Fund's borrowings will be fixed, the Fund's assets may change in value during the time a borrowing is outstanding, thus increasing exposure to capital risk. To the extent the return derived from the assets obtained with borrowed funds exceeds the interest and other expenses that the Fund will have to pay, the Fund's net return will be greater than if borrowing was not used. Conversely, however, if the return from the assets obtained with borrowed funds is not sufficient to cover the cost of borrowing, the net return of the Fund will be less than if borrowings were not used, and therefore the amount available for distribution to the Fund's shareholders as dividends will be reduced. The Fund expects that, if it determines to borrow, some or all of its borrowings may be made on a secured basis. If they are, the Fund's custodian will either segregate the assets securing the Fund's borrowings for the benefit of the Fund's lenders or arrangements will be made with a suitable sub-custodian, which may include a lender. If the assets used to secure the borrowing decrease in value, the Fund may be required to pledge additional collateral to the lender in the form of cash or securities to avoid liquidation of those assets. The rights of any lenders to the Fund to receive payments of interest on and repayments of principal of borrowings will be senior to the rights of the Fund's shareholders, and the terms of the Fund's borrowings may contain provisions that limit certain activities of the Fund and could result in precluding the purchase of instruments that the Fund would otherwise purchase. The Fund may borrow by entering into reverse repurchase agreements with any member bank of the Federal Reserve System and any broker-dealer or any foreign bank that has been determined by the investment adviser to be creditworthy. Under a reverse repurchase agreement, the Fund would sell securities and agree to repurchase them at a mutually agreed date and price. At the time the Fund enters into a reverse repurchase agreement, it will establish and maintain a segregated account, with its custodian or a designated sub-custodian containing cash or liquid obligations having a value not less than the repurchase price (including accrued interest). Reverse repurchase agreements involve the risk that the market value of the securities purchased with the proceeds of the sale of securities received by the Fund may decline below the price of the securities the Fund is obligated to repurchase. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the buyer or its trustee or receiver may receive an extension of time to determine whether to enforce the Fund's obligation to repurchase the securities, and the Fund's use of the proceeds of the reverse repurchase agreement may effectively be restricted pending the decision. Reverse repurchase agreements will be treated as borrowings for purposes of calculating the Fund's borrowing limitation. The Fund may, in addition to engaging in the transactions described above, borrow money from banks for temporary or emergency purposes (including, for example, clearance of transactions, share repurchases, tender offers or payments of dividends to shareholders) in an amount not exceeding 5% of the value of the Fund's total assets (including the amount borrowed). S-6 MANAGEMENT OF THE FUND The Fund's board of directors (the "Board") is responsible for the overall management of the Fund, including supervision of the duties performed by the Advisers. There are five directors of the Fund. Two of the directors are "interested persons" (as defined in the 1940 Act). The names and business addresses of the directors and officers of the Fund and their principal occupations and other affiliations during the past five years are set forth in the tables below: INFORMATION ABOUT DIRECTORS AND OFFICERS. Set forth in the following table is information about the Directors of the Fund, together with their address, age, position with the Fund, term of office, length of time served and principal occupation during the last five years. - ------------------------------ ------------------------ ---------------------------------------------- ------------------
Name, Address*, Age Position, Length of Principal Occupation(s) and Other Number of Funds Term Served, and Term Directorships held in Fund Complex of Office During the Past Five Years Overseen by Director - ------------------------------ ------------------------ ---------------------------------------------- ------------------ Disinterested Directors - ------------------------------ ------------------------ ---------------------------------------------- ------------------ Alfred G. Aldridge, Jr. Director of the Fund Retired; from 1982-2002, Sales Manager of 2 Brig. Gen. (Retired) since January 2002. Shamrock Foods Fund; Director of the Fiesta Cal. Air National Guard Current term expires Bowl, Tempe, AZ since 1997. Director, Age: 65 at Annual Meeting for Boulder Total Return Fund, Inc., since 1999. 2004 Richard I. Barr Director of the Fund Retired; from 1963-2001, Manager of 2 Age: 64 since January 2002. Advantage Sales and Marketing, Inc. Current term expires Director, Boulder Total Return Fund, Inc., at Annual Meeting for since 1999; Director, First Financial Fund, 2004 Inc., since 2001. Joel W. Looney Director of the Fund Partner, Financial Management Group, LLC 2 Age: 40 since January, 2002. since July 1999. Director, Boulder Total Current term expires Return Fund, Inc., since January 2001. at Annual Meeting for 2003 Interested Directors** - ------------------------------ ------------------------ ---------------------------------------------- ------------------ Susan L. Ciciora Director of the Fund Owner, Superior Interiors (interior design 2 Age: 38 since January 2002. for custom homes) since 1995; Corporate Current term expires Secretary, Ciciora Custom Builders, LLC at Annual Meeting for since 1995; Trustee of the Brown Trust and 2003 the EH Trust. Director, Boulder Total Return Fund, Inc., since November 2001. Stephen C. Miller Director and Chairman President and General Counsel of Boulder 2 Age: 49 of the Board since Investment Advisers, LLC ("BIA"); Manager, January 2002. Fund Administrative Services, LLC ("FAS"); President of the Vice President of Stewart Investment Fund. Current term Advisers ("SIA"); Director, Chairman of the expires at Annual Board and President of Boulder Total Return Meeting for 2005 Fund, Inc., since 1999. President and General Counsel, Horejsi, Inc. (liquidated in 1999); General Counsel, Brown Welding Supply, LLC (sold in 1999); Of Counsel, Krassa & Miller, LLC since 1991.
* Unless otherwise specified, the Directors' respective addresses are c/o Boulder Growth & Income Fund, Inc., 1680 38th Street, Suite 800, Boulder, Colorado 80301. ** Mr. Miller is an "interested person" because he is an officer of BIA and SIA, the Fund's investment advisers. Ms. Ciciora is an "interested person" as a result of the extent of her beneficial ownership of Fund shares and by virtue of her indirect beneficial ownership of the BIA and FAS. See "Benefit to Advisers and Administrator" below. S-7 From the late 1980's until January, 2001, Mr. Looney had served, without compensation, as one of three trustees of the Mildred Horejsi Trust, an affiliate of the EH Trust. The Mildred Horejsi Trust, the EH Trust and the other trusts and business entities affiliated with the Horejsi family are referred to herein as the "Horejsi Affiliates". The names of the executive officers of the Fund (other than Mr. Miller, who is described above) are listed in the table below. Each officer was elected to office by the Board at a meeting held on January 23, 2002. This table also shows certain additional information. Each officer will hold such office until a successor has been elected by the Board. - ------------------------------ -------------------------- ----------------------------------------------------------
Position, Length of Name, Address, Age Term Served, and Term of Principal Occupation(s) and Other Directorships held Office During the Past Five Years - ------------------------------ -------------------------- ---------------------------------------------------------- Carl D. Johns Chief Financial Officer, Vice President and Treasurer of BIA and Assistant 1680 38th Street, Chief Accounting Manager of FAS, since April, 1999; Vice President, Chief Suite 800 Officer, Vice President Financial Officer and Chief Accounting Officer, Boulder Boulder, CO 80301 and Treasurer since Total Return Fund, Inc., since 1999; Employee of Age: 39 January 2002. Appointed Flaherty & Crumrine Incorporated prior to December 31, annually. 1998; Assistant Treasurer of Preferred Income Management Fund Incorporated, Preferred Income Fund Incorporated and Preferred Income Opportunity Fund Incorporated prior to December 31, 1998. Stephanie Kelley Secretary since January Secretary, Boulder Total Return Fund, Inc., since 1680 38th Street, 2002. Appointed October 27, 2000; Assistant Secretary and Assistant Suite 800 annually. Treasurer of various Horejsi Affiliates; employee of FAS Boulder, CO 80301 since March 1999. Age: 45
In January 2002, the Board was presented with and considered an extensive proposal from the Advisers (then, the proposed advisers) recommending, among other things, a change in the Fund's investment adviser (the "Advisory Proposal"). The Advisory Proposal represented the recommendation by the Advisers and Stewart R. Horejsi on behalf of the Horejsi Affiliates. Throughout the process of considering the Advisory Proposal, the Board was advised by counsel to the Fund and separate counsel retained by the non-interested members of the Board. The Advisory Proposal presented the Board with extensive written materials concerning BIA and SIA, their personnel, financial condition, compliance and systems capability and related matters. The Board also reviewed extensive audited and unaudited performance data with respect to the Advisers' management of Boulder Total Return Fund, Inc. ("BTF"), including calendar year, fiscal year and 12-month total returns, returns on NAV and returns on market, and BTF's performance rank with Lipper Analytical Services ("Lipper") in a broad range of closed and open-end fund categories. In addition, the Board reviewed a report prepared by an independent accounting firm showing the investment performance achieved by Stewart R. Horejsi (the Advisers' primary portfolio manager), with respect to his family's portfolio of securities over a 10-year period ending 12/31/98. Cognizant of the fact that the Advisers had a relatively limited operating history with respect to advising a registered investment company, the Board carefully considered the capability of those parties to advise the Fund. The Board noted that the past performance of the Advisers is not necessarily indicative of future performance. The Board also considered the reasonableness of the proposed fees to be paid to the Advisers. In this regard, the Board took note that the fee proposed under the Advisory Proposal was identical to that paid to the Advisers by BTF and that the Fund was expected to be managed over time in much the same way as BTF (i.e., with "total return" being the Fund's objective), although some of the Fund's investment policies vis-a-vis BTF may differ. The Board also reviewed materials and reports supporting the reasonableness of the proposed fee, including data prepared by Lipper showing fees charged by funds investing in common stocks, expense ratios for those funds and profitability data of SIA and BIA assuming the approval of the proposed fee. In light of the possibly extended timetable for investing Fund assets in common stocks, the Board negotiated a waiver of a portion of the proposed fee until such time as at least 50% of Fund assets were invested in common stocks, which included investments in REITs and common stock of registered investment companies ("RICs"). Prior to and throughout the process of considering the Advisory Proposal, the Board held extensive discussions with Mr. Horejsi and other representatives of the Advisers. In the final analysis, the Board gave considerable weight to the views of Mr. Horejsi as a representative of the Fund's largest shareholder. Nonetheless, the Board carefully evaluated the impact of the Advisory Proposal on other holders of the Fund's common stock. The Board recognized that the Fund's expense ratio would increase as a result of implementing the Advisory Proposal. The Board considered this, as well as other possible disadvantages under the Advisory Proposal, to be outweighed by the potential long-term benefits to be derived from engaging the Advisers and shifting the Fund's focus to common stock investing. The Board also believed that engagement S-8 of the Advisers, as well as the other changes contemplated under the Advisory Proposal, were an appropriate and reasonable response to the recommendations of the Horejsi Affiliates. On January 23, 2002, the Directors of the Fund, including the non-interested directors, unanimously approved the Advisory Proposal. At the same meeting, the Board approved interim advisory agreements engaging the Advisers to manage the Fund's assets on an interim basis pending the outcome of shareholder support of the Advisory Proposal. On April 26, 2002, shareholders approved the Advisers consistent with the 1940 Act. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table sets forth certain information regarding the beneficial ownership of the Fund's shares as of August 23, 2002 by each person who is known by the Fund to beneficially own 5% or more of the Fund's Common Stock.
Number of Shares Number of Shares Percentage Name of Owner* Directly Owned Beneficially Owned Beneficially Owned - ------------------------------------- ------------------ ---------------------- ----------------------- Ernest Horejsi Trust No. 1B 1,171,400 20.68% Badlands Trust Company ---** 20.68% Stewart R. Horejsi Trust No. 2 ---** 20.68% Aggregate Shares Owned** 1,171,400 20.68%
- ---------------------------- * The address of each listed owner is c/o Badlands Trust Company, POB 801, 614 Broadway, Yankton, South Dakota 57078. ** Excludes shares owned by the Ernest Horejsi Trust No. 1B (the "EH Trust"). Badlands Trust Company ("Badlands") is one of three trustees of the EH Trust. Badlands is a trust company organized under the laws of South Dakota and is wholly owned by the Stewart R. Horejsi Trust No. 2, an irrevocable trust organized by Stewart R. Horejsi for the benefit of his issue. The directors of Badlands are Larry Dunlap, Stephen C. Miller, Robert Ciciora, who is the brother of Mr. Horejsi's son-in-law (John Ciciora), Gail G. Gubbels and Marty Jans. Badlands and its directors disclaim beneficial ownership of shares owned by the EH Trust. Together with Larry Dunlap and Badlands, Ms. Ciciora is a trustee of the EH Trust and also one of the beneficiaries of the EH Trust. Mr. Miller is an officer and director of Badlands. Because two of the Trust's trustees are required in order for the Trust to vote or exercise dispositive authority with respect to shares owned by the Trust, Ms. Ciciora and Mr. Miller each disclaim beneficial ownership of such shares. The EH Trust, Badlands and the Stewart R. Horejsi Trust No. 2, as well as other Horejsi affiliated trusts and entities are collectively referred to herein as the "Horejsi Affiliates". Information as to beneficial ownership in the previous paragraph has been obtained from a representative of the beneficial owners; all other information as to beneficial ownership is based on reports filed with the Securities and Exchange Commission (the "SEC") by such beneficial owners. As of October 31, 2002, Cede & Co., a nominee partnership of the Depository Trust Fund, held of record, but not beneficially, 4,429,471 shares or 78.2% of Common Stock outstanding of the Fund. As of October 18, 2002, the executive officers and directors of the Fund, as a group, owned 1,189,200 shares of the Common Stock (this amount includes the aggregate shares of Common Stock owned by the Horejsi Affiliates set forth above), representing 20.93% of Common Stock. OWNERSHIP OF THE FUND BY DIRECTORS. Set forth in the following table are the Directors of the Fund, together with the dollar range of equity securities beneficially owned by each Director or nominee in the Fund as of October 18, 2002, as well as the aggregate dollar range of equity securities in all funds overseen or to be overseen in a family of investment companies (i.e., funds managed by the Advisers). S-9 - -------------------------------------- -------------------------------- ---------------------------------
Disinterested Directors and Nominees Dollar Range of Equity Aggregate Dollar Range of Securities in the Fund Equity Securities in All Funds in the Family of Investment Companies - -------------------------------------- -------------------------------- --------------------------------- Alfred G. Aldridge, Jr. Under $10,000 $10,001 to $50,000 Richard I. Barr Under $10,000 Over $100,000 Joel W. Looney Under $10,000 $10,001 to $50,000 Interested Directors and Nominees - -------------------------------------- -------------------------------- --------------------------------- Susan L. Ciciora Over $100,000'D' Over $100,000 Stephen C. Miller Over $100,000'D''D' Over $100,000
'D' 1,171,400 shares of the Fund are held by the EH Trust. Accordingly, Ms. Ciciora may be deemed to have indirect beneficial ownership of such shares. Ms. Ciciora disclaims all such beneficial ownership. Ms. Ciciora directly owns 2,500 shares of the Fund. 'D''D' Mr. Miller directly owns 5,600 shares of the Fund and indirectly owns and controls 2,800 shares of the Fund through his membership in Erma Miller, LLC. Mr. Miller is also a director and officer of Badlands Trust Fund. By virtue of such relationships, Mr. Miller may be deemed to share the indirect power to vote and direct the disposition of the shares directly and beneficially held by EH Trust and Badlands Trust Fund. Mr. Miller disclaims beneficial ownership of such shares. None of the disinterested Directors or their family members owned beneficially or of record any securities of the Fund's advisers or any person directly or indirectly controlling, controlled by, or under common control with the advisers. As of October 18, 2002, the officers and members of the Board owned, in the aggregate, 1,189,200 shares of the Fund's common stock. DIRECTOR COMPENSATION. The following table sets forth certain information regarding the compensation of the Fund's Directors for the fiscal year ended June 30, 2002. No persons (other than the "independent" Directors, as set forth below) currently receive compensation from the Fund for acting as a Director or officer. Directors and executive officers of the Fund do not receive pension or retirement benefits from the Fund. Directors receive reimbursement for travel and other out of pocket expenses incurred in connection with Board meetings. S-10
Aggregate Compensation Name of Person and from the Fund Paid to Directors Total Compensation from the Fund Position with the Fund Fiscal Year Ending 6/30/02 and Fund Complex Paid to Director - --------------------------------------- ---------------------------------- --------------------------------- Alfred G. Aldridge, Jr., Director $6,000 $29,500 (2 funds) Richard I. Barr, Director $6,000 $29,500 (2 funds) Joel W. Looney, Director $6,000 $29,500 (2 funds) Susan L. Ciciora, Director $0 $0 Stephen C. Miller, President of the $0 $0 Fund, Chairman of the Board and Director
Prior to January 28, 2002, each Director of the Fund who was not an officer of the Fund received a fee of $2,000 per annum plus $1,000 for each in-person meeting, and $250 for each telephone meeting. In addition, the Audit Committee and Nominating Committee members received an additional $250 for each committee meeting attended. Committee chairs received an additional $375 for each committee meeting chaired. As of January 28, 2002, each Director of the Fund who is not a Director, officer or employee of the Advisers, or any of their affiliates, receives a fee of $3,000 for each in-person meeting, and $500 for each telephone meeting, constituting their full compensation. Each Director of the Fund is reimbursed for travel and out-of-pocket expenses associated with attending Board and committee meetings. The Board held seven meetings (three of which were held by telephone conference call) during the fiscal year ended June 30, 2002. Each Director currently serving in such capacity attended at least 75% of the meetings of Directors and any committee of which he is a member. The aggregate remuneration paid to the Directors of the Fund for acting as such during the fiscal year ended June 30, 2002 amounted to $49,706.(1) COMMITTEES OF THE BOARD OF DIRECTORS Audit Committee; Report of Audit Committee. The Audit Committee reviews the scope and results of the Fund's annual audit with the Fund's independent accountants and recommends the engagement of such accountants. Management, however, is responsible for the preparation, presentation and integrity of the Fund's financial statements, and the independent accountants are responsible for planning and carrying out proper audits and reviews. The Board adopted a written charter for the Audit Committee on January 23, 2002. The Audit Committee met three times during the fiscal year ended June 30, 2002. In connection with the audited financial statements as of and for the year ended June 30, 2002 included in the Fund's Annual Report for the year ended June 30, 2002 (the "Annual Report"), at a meeting held on August 12, 2002, the Audit Committee considered and discussed the audited financial statements with management and the independent accountants, and discussed the audit of such financial statements with the independent accountants. The members of the Audit Committee are not professionally engaged in the practice of auditing or accounting and are not employed by the Fund for accounting, financial management or internal control. Moreover, the Audit Committee relies on and makes no independent verification of the facts presented to it or representations made by management or the independent accountants. Accordingly, the Audit Committee does not provide an independent basis for determining that management has maintained appropriate accounting and financial reporting principles and policies, or internal controls and procedures, designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee's considerations and discussions referred to above do not provide assurance that the audit of the Fund's financial statements has been carried out in accordance with generally accepted accounting standards or that the financial statements are presented in accordance with generally accepted accounting principles. Nominating Committee. The Board has a Nominating Committee consisting of Messrs. Looney, Aldridge and Barr which is responsible for considering candidates for election to the Board in the event a position is vacated or created. - -------- (1) Former Directors of the Fund (i.e., prior to January 28, 2002) were Timothy J. Ebner, Gustavo E. Gonzales, Jr., Ben H. Love , Judith L. Craven, Dr. Norman Hackerman, John W. Lancaster and F. Robert Paulsen. Between July 1, 2001 and December 31, 2001 such directors were paid $31,706. S-11 The Nominating Committee would consider recommendations by shareholders if a vacancy were to exist. Such recommendations should be forwarded to the Secretary of the Fund. The Nominating Committee of the Fund did not meet during the fiscal year ended June 30, 2002. The Fund does not have a compensation committee. CODES OF ETHICS The Fund and the Advisers have adopted codes of ethics pursuant to Rule 17j-1 under the 1940 Act that permits investment personnel subject to their particular codes of ethics to invest in securities, including securities that may be purchased or held by the Fund, for their own accounts. The codes of ethics are on public file with, and are available from, the Securities and Exchange Commission's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-(202)-942-8090 and these codes of ethics are available on the EDGAR database on the Commission internet site at http://www.sec.gov. Copies of these codes of ethics may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Commission's Public Reference Section, Washington, D.C. 20549-0102. Compensation to the Advisers and Administrators. Information is provided in the Prospectus concerning the Advisers and Administrator and their agreements with the Fund. The amounts paid to such persons during the last three fiscal years or, if shorter, the period during which the entity was retained to provide services to the Fund are as follows:
Fees Paid ------------------ ----------------- ------------------ Name of Entity 2000 2001 2002* - -------------------------------------------------------------- ------------------ ----------------- ------------------ Boulder Investment Advisers, LLC $0 $0 $87,145.48 Stewart Investment Advisers (aka Stewart West Indies Trading $0 $0 Company, Ltd.) $261,436.42 Fund Administrative Services, LLC** $0 $0 $97,149.44
*From January 23, 2002 (the date the Advisers and Administrator commenced providing services to the Fund) through October 31, 2002. **From fees received under the Administrative Agreement, the Administrator is required to pay substantially all fees charged by any sub-administrators and certain other out-source service providers providing services to the Fund. PFPC, Inc. is a sub-administrator to the Fund under a sub-administration agreement between the PFPC, Inc. and the Administrator. Under the terms of this agreement, the Administrator paid PFPC, Inc. $38,859.78 for services provided from January 23, 2002 through October 31, 2002. Also from fees received under the Administrative Agreement, the Administrator is required to pay customary fees charged the Fund by its custodian and transfer agent. During the period from January 23, 2002, through October 31, 2002, the Administrator paid custodian and transfer agency fees in the amount of $24,068.74. BROKERAGE ALLOCATION AND OTHER PRACTICES The Advisers are responsible for decisions to buy and sell securities for the Fund, the selection of brokers and dealers to effect the transactions and the negotiation of prices and any brokerage commissions. The Fund may purchase certain money market instruments directly from an issuer in which case no commissions or discounts are paid. From January 23, 2002 through October 31, 2002, the Fund paid $44,744.00 in brokerage commissions. The increase in brokerage commissions in the last fiscal year is due to the change in the Fund's investment focus from primarily corporate bonds to a combination of common stocks and fixed income securities. No separate brokerage commission is typically paid on bond transactions, which are typically executed on a principal basis, in contrast to common stock transactions, where brokerage commissions are the norm. The Advisers are responsible for effecting securities transactions of the Fund and will do so in a manner deemed fair and reasonable to shareholders of the Fund and not according to any formula. The primary considerations in selecting the manner of executing securities transactions for the Fund will be prompt execution of orders, the size and breadth of the market for the security, the reliability, integrity and financial condition and execution capability of the firm, the amount of difficulty in executing the order, and the best net price. There are many instances when, in the judgment of the Advisers more than one firm can offer comparable execution services. In selecting among such firms, consideration may be given to those firms which supply research and other services in addition to execution services, although the Fund does not typically rely on such research. Consideration may also be given to the sale of shares of the Fund. However, it is not the policy of the S-12 Advisers, absent special circumstances, to pay higher commissions to a firm because it has supplied such research or other services. The Advisers are able to fulfill their obligations to furnish a continuous investment program to the Fund without receiving research from brokers; however, it considers access to such information as an element of financial management. Although such information is considered useful, its value is not determinable, as it must be reviewed and assimilated by the Advisers, and does not reduce the Advisers' normal research activities in rendering investment advice. It is possible that the Advisers' expenses could be materially increased if it attempted to purchase this type of information or generate it through its own staff. Currently, the Advisers manage two investment companies: the Fund and the Boulder Total Return Fund, Inc. However, if the Advisers were to manage other accounts, investment decisions for the Fund would be made independently from those of such other accounts; however, from time to time, the same investment decision might be made for more than one company or account. If two or more accounts were to seek to purchase or sell the same securities, the securities actually purchased or sold would be allocated among the companies and accounts on a good faith equitable basis by the Advisers in their discretion in accordance with the accounts' various investment objectives. In some cases, this system may adversely affect the price or size of the position obtainable for the Fund. In other cases, however, the ability of the Fund to participate in volume transactions may produce better execution for the Fund. Although the investment co-advisory agreements contain no restrictions on portfolio turnover, it is not the Fund's policy to engage in transactions with the objective of seeking profits from short-term trading. It is expected that the annual portfolio turnover rate of the Fund will be less than 50% excluding securities having a maturity of one year or less. Because it is difficult to accurately predict portfolio turnover rates, actual turnover may be higher or lower. Higher portfolio turnover results in increased Fund expenses, including brokerage commissions, dealer mark-ups and other transaction costs on the sale of securities and on the reinvestment in other securities. For the fiscal years ended June 30, 2001 and June 30, 2002, the Fund's portfolio turnover rates were 83% and 180%. The increase in turnover rate is due to a transitioning of the Fund's corporate bond investments to common stocks consistent with the Fund's new investment objective. REPURCHASE OF SHARES The Fund is a closed-end investment company and as such its common shareholders do not have the right to cause the Fund to redeem their shares. Instead, the Fund's common shares trade in the open market at a price that is a function of several factors, including net asset value, dividend stability, relative demand for and supply of such shares in the market, general market and economic conditions, dividend stability, dividend levels (which are in turn affected by expenses), and other factors. Because shares of a closed-end investment company may frequently trade at prices lower than net asset value (a "Discount"), the Board may consider actions that might be taken to reduce or eliminate any material Discount in respect of common shares, which may include the repurchase of such shares in the open market or in private transactions, the making of a tender offer for such shares at net asset value, or the conversion of the Fund to an open-end investment company. The Board may not decide to take any of these actions. In addition, there can be no assurance that share repurchases or tender offers, if undertaken, will reduce any Discount. If the Fund should issue preferred stock in the future, the Fund's ability to repurchase shares of, or tender for, its common stock may be limited by the asset coverage requirements of the 1940 Act and by asset coverage and other requirements imposed by various rating agencies. No assurance can be given that the Board will decide to undertake share repurchases or tenders or, if undertaken, that repurchases and/or tender offers will result in the Fund's common stock trading at a price that is close to, equal to or above net asset value. The Fund may borrow to finance repurchases and/or tender offers. Any tender offer made by the Fund for its shares may be at a price equal to or less than the net asset value of such shares. Any service fees incurred in connection with any tender offer made by the Fund will be borne by the Fund and will not reduce the stated consideration to be paid to tendering shareholders. Subject to its investment limitations, the Fund may borrow to finance the repurchase of common shares or to make a tender offer. Interest on any borrowings to finance share repurchase transactions or the accumulation of cash by the Fund in anticipation of share repurchases or tenders will reduce the Fund's net income. Any share repurchase, tender offer or borrowing that might be approved by the Board would have to comply with the Securities Exchange Act of 1934 and the 1940 Act and the rules and regulations under each of those acts. Although the decision to take action in response to a Discount will be made by the Board at the time it considers such issue, it is the Board's present policy, which may be changed by the Board, not to authorize repurchases of common shares or a tender offer for such shares if (1) such transactions, if consummated, would (a) result in the delisting of the common shares from the NYSE, or (b) impair the Fund's status as a regulated investment company under the Internal Revenue Code (which S-13 would make the Fund a taxable entity, causing the Fund's income to be taxed at the corporate level in addition to the taxation of shareholders who receive dividends from the Fund) or as a registered closed?end investment company under the 1940 Act; (2) the Fund would not be able to liquidate portfolio securities in an orderly manner and consistent with the Fund's investment objective and policies in order to repurchase shares; or (3) there is, in the board's judgment, any (a) material legal action or proceeding instituted or threatened challenging such transactions or otherwise materially adversely affecting the Fund, (b) general suspension of or limitation on prices for trading securities on the NYSE, (c) declaration of a banking moratorium by Federal or state authorities or any suspension of payment by United States banks in which the Fund invests, (d) material limitation affecting the Fund or the issuers of its portfolio securities by Federal or state authorities on the extension of credit by lending institutions or on the exchange of foreign currency, (e) commencement of war, armed hostilities or other international or national calamity directly or indirectly involving the United States, or (f) other event or condition which would have a material adverse effect (including any adverse tax effect) on the Fund or its shareholders if shares were repurchased. The Board may in the future modify these conditions in light of experience. The repurchase by the Fund of its common shares at prices below net asset value will result in an increase in the net asset value of those shares that remain outstanding. However, there can be no assurance that share repurchases or tenders at or below net asset value will result in the Fund's common shares trading at a price equal to their net asset value. Nevertheless, the fact that the Fund's shares may be the subject of repurchase or tender offers at net asset value from time to time, or that the Fund may be converted to an open?end company, may be helpful in reducing any spread between market price and net asset value that might otherwise exist. In addition, a purchase by the Fund of its common shares will decrease the Fund's total assets, which would likely have the effect of increasing the Fund's expense ratio. Any purchase by the Fund of its common shares at a time when preferred shares are outstanding will increase the leverage applicable to the outstanding common shares then remaining and decrease the asset coverage of the preferred shares. Before deciding whether to take any action if the common shares trade below net asset value, the Board would likely consider all relevant factors, including the extent and duration of the discount, the liquidity of the Fund's portfolio, the impact of any action that might be taken on the Fund or its shareholders and market considerations. Based on these considerations, even if the Fund's shares should trade at a discount, the Board may determine that, in the interest of the Fund and its shareholders, no action should be taken. TAX STATUS The Fund has qualified and elected, and intends to continue to qualify under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), as a regulated investment company. To qualify for tax treatment as a regulated investment company, the Fund must, among other things: (a) distribute to its shareholders at least an amount equal to the sum of (i) 90% of its net investment income (which is its investment company taxable income as that term is defined in the Code but determined without regard to the deduction for dividends paid) and (ii) 90% of its net tax-exempt interest income and (b) diversify its holdings so that, at the end of each quarter of the Fund's taxable year (i) at least 50% of the market value of the Fund's assets is represented by cash, cash items, U.S. government securities and securities of other regulated investment companies, and other securities, with these other securities limited, with respect to any one issuer, to an amount not greater in value than 5% of the Fund's total assets, and to not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the market value of the Fund's assets is invested in the securities of any one issuer (other than U.S. government securities or securities of other regulated investment companies) or of any two or more issuers that the Fund controls and which are determined to be engaged in the same trade or business or similar or related trades or businesses. In meeting these requirements, the Fund may be restricted in the utilization of certain of the investment techniques described above and in the Prospectus. If in any year the Fund should fail to qualify for tax treatment as a regulated investment company, the Fund would incur a regular Federal corporate income tax upon its taxable income for that year without any deduction for distributions paid to its shareholders, and distributions to its shareholders would be taxable to such holders as ordinary income to the extent of the Fund's earnings and profits. A regulated investment company that fails to distribute, by the close of each calendar year, at least an amount equal to the sum of 98% of its ordinary taxable income for such year and 98% of its capital gain net income for the one-year period ending October 31 in such year, plus any shortfalls from the prior year's required distribution, is liable for a 4% excise tax on the portion of the undistributed amount of such income that is less than the required amount for such distributions. To avoid the imposition of this excise tax, the Fund generally makes the required distributions of its ordinary taxable income, if any, and its capital gain net income, to the extent possible, by the close of each calendar year. Certain of the Fund's investment practices are subject to special provisions of the Code that, among other things, may defer the use of certain deductions or losses of the Fund, affect the holding period of securities held by the Fund and alter the S-14 character of the gains or losses realized by the Fund. These provisions may also require the Fund to recognize income or gain without receiving cash with which to make distributions in the amounts necessary to satisfy the requirements for maintaining regulated investment company status and for avoiding income and excise taxes. The Fund will monitor its transactions and may make certain tax elections in order to mitigate the effect of these rules and prevent disqualification of the Fund as a regulated investment company. Distributions to shareholders derived from the Fund's ordinary income and net short-term capital gains, if any, will be taxable to its shareholders as ordinary income. Distributions by the Fund of net capital gain (which is the excess of net long-term capital gain over net short-term capital loss), if any, are taxable as long-term capital gain, regardless of the length of time the shareholder has owned common shares or AMPS. Distributions, if any, in excess of the Fund's earnings and profits will first reduce the adjusted tax basis of a shareholder's shares and, after that basis has been reduced to zero, will constitute capital gain to the shareholder (assuming the shares are held as a capital asset). The sale or other disposition of common shares will normally result in capital gain or loss to shareholders if such shares are held as capital assets. Present law taxes both long-term and short-term capital gains of corporations at the rates applicable to ordinary income. For non-corporate taxpayers, however, short-term capital gains and ordinary income will be taxed at a maximum rate of 39.6% while long-term capital gains generally will be taxed at a maximum rate of 20%. However, because of the limitations on itemized deductions and the deduction for personal exemptions applicable to higher income taxpayers, the effective rate of tax may be higher in certain circumstances. Losses realized by a shareholder on the sale or exchange of shares of the Fund held for six months or less are disallowed to the extent of any distribution of exempt-interest dividends received with respect to such shares, and, if not disallowed, such losses are treated as long-term capital losses to the extent of any distribution of net capital gain received with respect to such shares. A shareholder's holding period is suspended for any periods during which the shareholder's risk of loss is diminished as a result of holding one or more other positions in substantially similar or related property, or through certain options or short sales. Any loss realized on a sale or exchange of shares of the Fund will be disallowed to the extent those shares of the Fund are replaced by other shares within a period of 61 days beginning 30 days before and ending 30 days after the date of disposition of the original shares. In that event, the basis of the replacement shares of the Fund will be adjusted to reflect the disallowed loss. Nonresident alien individuals and certain foreign corporations and other entities ("foreign investors") generally are subject to U.S. withholding tax at the rate of 30% (or possibly a lower rate provided by an applicable tax treaty) on distributions of net investment income (which includes net short-term capital gain). Different tax consequences may result if the owner is engaged in a trade or business in the United States or, in the case of an individual, is present in the United States for 183 or more days during a taxable year. The Fund is required in certain circumstances to backup withhold 30% of taxable dividends and certain other payments paid to non-corporate registered holders of the Fund's shares who do not furnish to the Fund their correct taxpayer identification number (in the case of individuals, their social security number) and certain certifications, or who are otherwise subject to backup withholding. Backup withholding is not an additional tax. Any amounts withheld from payments made to a shareholder may be refunded or credited against such shareholder's United States federal income tax liability, if any, provided that the required information is furnished to the IRS. The foregoing is a general summary of the provisions of the Code and regulations thereunder presently in effect as they directly govern the taxation of the Fund and its shareholders. These provisions are subject to change by legislative or administrative action, and any such change may be retroactive. Moreover, the foregoing does not address many of the factors that may be determinative of whether an investor will be liable for the federal alternative minimum tax. Shareholders are advised to consult their own tax advisers for more detailed information concerning the federal income tax consequences of purchasing, holding and disposing of Fund shares, as well as any related state, local and foreign tax consequences. FINANCIAL STATEMENTS INDEPENDENT ACCOUNTANTS. KPMG LLP ("KPMG"), at 99 High Street, Boston, MA 02110, has served as independent accountants for the Fund since January 23, 2002, and has been selected to serve in such capacity for the Fund's fiscal year ending November 30, 2002. The financial statements and independent auditors report incorporated by reference into this statement of additional information have been so incorporated and the financial highlights included in the Prospectus have been so included in reliance upon the report of KPMG given on their authority as experts in auditing and accounting. S-15 Incorporation by Reference. The Fund's Portfolio of Investments, dated June 30, 2002 (audited); Statement of Assets and Liabilities, dated June 30, 2002 (audited); Statement of Operations for the year ended June 30, 2002 (audited); Statement of Changes in Net Investment Assets for the two years ended June 30, 2002 (audited) and the independent auditors report included in the Fund's Annual Report for the fiscal year ended June 30, 2002, which accompany this statement of additional information, are incorporated herein by reference. The Fund will furnish, without charge, a copy of the Annual Report upon written request to PFPC Inc., P.O. Box 1376, Boston, Massachusetts 02104 or by calling 1-800-331-1710. ADDITIONAL INFORMATION A Registration Statement on Form N-2, including amendments thereto, relating to the shares offered hereby, has been filed by the Fund with the Securities and Exchange Commission, Washington, D.C. The Prospectus and this statement of additional information do not contain all of the information set forth in the Registration Statement, including any exhibits and schedules thereto. For further information with respect to the Fund and the shares offered hereby, reference is made to the Registration Statement. Statements contained in the Prospectus and this statement of additional information as to the contents of any contract or other document referred to are not necessarily complete and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. S-16 Part C. Other Information. Item 24. Financial Statements and Exhibits 1. Financial Statements: a. Financial Statements included in Part A (Prospectus) of this Registration Statement: b. Financial Statements included in Part B (Statement of Additional Information) of this Registration Statement. i. Report of Independent Accountants.* ii. Statement of assets and liabilities as of June 30, 2002.* iii. Statement of operations for the year ended June 30, 2002.* iv. Statement of cash flows for the year ended June 30, 2002.* v. Statement of changes in net assets for each of the years ended June 30, 2002.* and 2001.* vi. Schedule of Investments as of June 30, 2002.* vii. Notes to Financial Statements for year ended June 30, 2002.* * Incorporated herein by reference to the Registrant's Form N30-D filed on August 21, 2002, for year ending June 30, 2002. 2. Exhibits a. Fund's Charter i. Articles of Incorporation of the Fund ii. Articles of Amendment dated October 9, 1991 iii. Articles of Amendment dated November 24, 1998 iv. Articles Supplementary dated January 18, 2000 v. Articles of Amendment dated April 26, 2002 vi. Articles of Amendment dated October 1, 2002 vii. Articles of Amendment dated October 21, 2002 b. Amended and Restated By-laws of the Fund c. Not applicable d. Share Certificate and Subscription Documents i. Specimen certificate for common shares ii. Notice of Intent iii. Subscription Certificate iv. Broker Split Request v. Beneficial Owner Certification vi. Nominee Over-Subscription vii. DTC Over-Subscription viii. Notice of Guaranteed Delivery e. Not applicable f. Not applicable Part C Page 1 g. Investment Advisory Agreements i. Investment Advisory between the Fund and Boulder Investment Advisers, L.L.C. ("BIA") ii. Investment Advisory Agreement between the Fund and Stewart Investment Advisers, Ltd. ("SIA") h. Not applicable i. Deferred Compensation Plan of Kalman J. Cohen, Director j. Custody Agreement between the Fund and State Street Bank and Trust Company k. Other Agreements i. Transfer Agency Agreement between the Fund and the Mellon Investor Services, LLC ii. Administration Agreement between the Fund and Fund Administrative Services, LLC. iii. Amendment to Administration Agreement between the Fund and Fund Administrative Services, LLC. iv. Information Agent Fee Agreement among the Fund and Georgeson Shareholder Communication. v. Subscription Agent Fee Agreement among the Fund and Colbent Corporation l. Opinions of Counsel i. Opinion and consent of Willkie Farr & Gallagher ii. Opinion and consent of Venable, Baetjer and Howard, LLP m. Consent to Service of Process with respect to Stewart West Indies Trading Company, Ltd. (SIA) n. Consent of KPMG, LLP o. Not applicable p. Form of Letter Agreement between the Fund and USLIFE Corporation q. Not applicable r. Code of Ethics of the Fund, BIA and SIA s. Power of attorney (included on signature page) Item 25. Marketing Arrangements. Not Applicable. Item 26. Other Expenses of Issuance and Distribution. The Fund expects to incur approximately $229,000 of expenses in connection with the Offering. The following table identifies the significant expenses associated with the Offering. NYSE Fees $ 19,600 Printing Costs $ 12,500 Fees and Expenses of Qualification Under State $ 5,000 Securities Laws Auditing Fees and Expenses $ 5,000 Legal Fees and Expenses $ 70,000 Subscription Agent Expense $ 62,500 Information Agent Expenses $ 18,000 Part C Page 2 Street Account Proxy - Direct Bill from ADP $ 8,125 Underwriter Expenses $ - Postage and Delivery Charges $ 20,000 Miscellaneous $ 8,500 TOTAL ESTIMATED COSTS $229,225 Item 27. Persons controlled by or under common control with the Fund. None. Item 28. Number of Holders of Shares. - ------------------------------------------------------------------------------- Title of Class Record Holders as of October 31, 2002 - ------------------------------------------------------------------------------- Common Stock, par value $.01 per share 3,818 - -------------------------------------------------------------------------------
Item 29. Indemnification. Section 2-418 of the General Corporation Law of the State of Maryland, Article VIII of the Registrant's Articles of Incorporation (to be filed as an Exhibit to this Registration Statement), Article 5.2 of the Registrant's By-laws (to be filed as an Exhibit to this Registration), the Investment Advisory Agreements (to be filed as Exhibits to this Registration Statement) provide for indemnification. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the Registrant, pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 30. Business and Other Connections of the Investment Adviser. Registrant is fulfilling the requirement of this Item 30 to provide a list of the officers and directors of its investment advisers, together with information as to any other business, profession, vocation or employment of a substantial nature engaged in by that entity or those of its officers and directors during the past two years, by incorporating herein by reference the information contained in the current Form ADV filed with the Securities and Exchange Commission by each of BIA and SIA pursuant to the Investment Advisers Act of 1940, as amended. Item 31. Location of Accounts and Records. Fund Administrative Services, L.L.C. Administrator 1680 38th Street (Suite 800) Boulder, CO 80301 PFPC Inc. Sub-Administrator P.O. Box 1376 Boston, MA 02104 Mellon Investor Services LLC Transfer Agent P.O. Box 3315 South Hackensack, NJ 07606 Part C Page 3 or 85 Challenger Road Ridgefield Park, NJ 07660 State Street Bank and Trust Company Custodian 225 Franklin Street Boston, Massachusetts 02110 Item 32. Management Services. Not applicable. Item 33. Undertakings 1. The Registrant hereby undertakes to suspend the offering of the shares until it amends its Prospectus if subsequent to the effective date of its Registration Statement, the net asset value declines more than 10 percent from its net asset value as of the effective date of the Registration Statement. 2. Not applicable. 3. Not applicable. 4. Not applicable. 5. The Registrant hereby undertakes that: a. for the purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of a registration statement in reliance on Rule 430A and contained in the form of prospectus filed by the Registrant under Rule 497(h) under the Securities Act of 1933 shall be deemed to be part of the Registration Statement as of the time it was declared effective. b. for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof. 6. The Registrant hereby undertakes to send by first class mail or other means designed to ensure equally prompt delivery, within two business days of receipt of an oral or written request, any Statement of Additional Information. Part C Page 4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boulder and the State of Colorado, on the 20th day of November, 2002. BOULDER GROWTH & INCOME FUND, INC. By: /s/ Stephen C. Miller ----------------------------- President POWER OF ATTORNEY KNOW ALL PEOPLE BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Stephen C. Miller and Carl D. Johns, and each and any of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and his name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to the Registration Statement for the Boulder Growth & Income Fund, Inc. on Form N-2, and to sign any registration statement that is to be effective upon filing pursuant to Rule 462 promulgated under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done; hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date - -------------------------------------------------------------------------------------------------------------- /s/ Stephen C. Miller Director, Chief Executive Officer, President and November 20, 2002 Chairman of the Board /s/ Susan L. Ciciora* Director November 20, 2002 /s/ Joel W. Looney* Director November 20, 2002 /s/ Alfred G. Aldridge, Jr.* Director November 20, 2002 /s/ Richard I. Barr* Director November 20, 2002 /s/ Carl D. Johns* Chief Financial Officer, Chief Accounting November 20, 2002 Officer, Vice President and Treasurer
* By Stephen C. Miller as attorney in fact Part C Page 5 STATEMENT OF DIFFERENCES ------------------------ The dagger symbol shall be expressed as..................... 'D' The double dagger symbol shall be expressed as.............. 'DD' EX-99.2A 3 ex2-ai.txt EXHIBIT 2(A)(I) EXHIBIT (a)(i) ARTICLES OF INCORPORATION OF THE FUND ARTICLES OF INCORPORATION OF USLIFE INCOME FUND, INC. FIRST: I, THE UNDERSIGNED ANTHONY J. STILO, whose post-office address is 125 Maiden Lane, New York. New York 10038, being at least twenty-one years of age, do, under and by virtue of the General Laws of the State of Maryland authorizing the formation of corporations, act as incorporator with the intention of forming a corporation. SECOND: The name of the corporation is USLIFE INCOME FUND, INC. THIRD: The purposes for which the corporation is formed are: To purchase or otherwise acquire, invest and reinvest in, own, hold, sell or otherwise dispose of securities of every kind and nature, including, without limitation, stocks, warrants and rights exercisable for stock, bonds, debentures, obligations or evidences of indebtedness, bank acceptances and commercial paper. To exercise any and all rights, powers or privileges of individual ownership or interest in respect of securities owned by it or in which it has any interest. To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Maryland or other applicable corporation law or laws as in effect, from time to time, in the State of Maryland, and in general, to do any or all such other things in connection with the objects and purposes of the corporation hereinbefore set forth, as are, in the opinion of the Board of Directors of the corporation, necessary, incidental, relative or conducive to the attainment of such objects arid purposes; and to do such acts and things, and to exercise any and all such powers to the same extent as a natural person might or could lawfully do to the full extent authorized or permitted to a corporation under any laws that may be now or hereafter applicable or available to the corporation. The foregoing objects and purposes shall, except when otherwise expressed, be in no way limited or restricted by reference to or inference from the terms of any other clause of this or any other Article of these Articles of Incorporation or any amendment thereto, and shall each be regarded as independent, and construed as powers as well as objects and purposes. Nothing herein contained shall be construed as giving the corporation any rights, powers or privileges not permitted to it by law. FOURTH: The post-office address of the principal office of the corporation in this State is c/o The Corporation Trust Incorporated, First Maryland Building, 25 South Charles Street, Baltimore, Maryland 21201. The name of the resident agent of the corporation in this State is The Corporation Trust Incorporated, a corporation of this State, and the post-office address of the resident agent is First Maryland Building, 25 South Charles Street, Baltimore, Maryland 21201. FIFTH: The total number of shares of stock which the corporation shall have authority to issue is ten million (10.000,000) shares, of Common Stock, of the par value of One Dollar ($1.00) each and of the aggregate par value of Ten Million Dollars ($10,000,000), all of which shall be of the same class. SIXTH: The number of directors of the corporation shall initially be three, and the names of the directors who shall act until the first annual meeting or until their successors are duly chosen and qualify are: Gordon E. Crosby, Jr., Anthony J. Stilo and Samuel J. Giuliano. However, the By-Laws of the corporation may fix the number of directors at a number other than three and may authorize the Board of Directors, by the vote of a majority of the entire Board of Directors, to increase or decrease the number of directors within a limit specified in the By-Laws, provided that in no case shall the number of directors be less than three, and to fill the vacancies created by and such increase in the number of directors. Unless otherwise provided by the By-Laws of the corporation, the directors of the corporation need not be shareholders. SEVENTH: The following provisions are hereby adopted for the purpose of defining, limiting and regulating the powers of the corporation and of the directors and stockholders: 1. The Board of Directors shall have the general management and control of the business and property of the corporation, and may exercise all the powers of the corporation, except such as are by law or by these Articles of Incorporation or by the By-Laws conferred upon or reserved to the stockholders. The corporation may in its By-Laws confer powers on the Board of Directors in addition to the powers expressly conferred by statute. 2. No holder of shares of stock of the corporation of any class shall be entitled as such, as a matter of right, to subscribe for or purchase any part of any new or additional issue of shares of stock of any class or of securities convertible into shares of stock of any class, whether now or hereafter authorized. All persons who shall acquire stock in the corporation shall acquire the same subject to the provisions of these Articles of Incorporation. 3. The corporation reserves the right to take any lawful action and to make any amendment of these Articles of Incorporation, including the right to make any amendment which changes the terms of any shares of the capital stock of the corporation of any class now or hereafter authorized by classification, reclassification, or otherwise, and to make any amendment authorizing any sale, lease, exchange or transfer of the property and assets of the corporation as an entirety, or substantially as an entirety, with or without its good will and franchise, if a majority of all the shares of the capital stock of the corporation at the time issued and outstanding and entitled to vote, vote in favor of any such action or amendment, or consent thereto in writing, and reserves the right to make any amendment of these Articles of Incorporation in any form, manner or substance now or hereafter authorized or permitted by law. 4. The stockholders and directors may hold their meetings and have an office or offices outside the State of Maryland, and the books of the Company may be kept (subject to any provision contained in any applicable statute) outside the State of Maryland at such place or places as may be from time to time designated by the Board of Directors. EIGHTH: Any determination made in good faith and, so far as accounting matters are involved, in accordance with generally accepted accounting principles by or pursuant to the direction of the Board of Directors, as to the amount of the assets, debts, obligations, or liabilities of the corporation, as to the amount of any reserves or charges set up and the propriety thereof, as to the time of or purposes for creating such reserves or charges, as to the use, alteration or cancellation of any reserves or charges (whether or not any debt obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged or shall be then or thereafter required to be paid or discharged), as to the price or closing bid or asked price of any security owned or held by the corporation, as to the market value of any security or fair value of any other asset of the corporation as to the number of shares of the corporation outstanding, as to the estimated expense to the corporation in connection with purchases of its shares, as to the ability to liquidate securities in orderly fashion, as to the extent to which it is practicable to deliver a cross-section of the portfolio of the corporation in payment for such shares, or as to any other matters relating to the issue, sale, purchase and/or other acquisition or disposition of securities of shares of the corporation, shall be final and conclusive, and shall be binding upon the corporation and all holders of its shares, past, present and future, and shares of the corporation are issued and sold on the condition and understanding, evidenced by acceptance of certificates for such shares, that any and all such determinations shall be binding as aforesaid. Nothing in these Articles of Incorporation shall be construed to protect any director or officer of the corporation against any liability to the corporation or its stockholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. NINTH: The corporation is adopting its corporate title by permission of USLIFE ADVISERS, INC., and the corporation's right to use the name "USLIFE" is subject to the right of USLIFE ADVISERS, INC. or assigns at any time to elect that the corporation stop using the name "USLIFE" in any form or combination as part of its name, in any literature or reference whatsoever. All proprietary interest in the name "USLIFE" shall remain exclusively the property of USLIFE ADVISERS, INC., and at the written request of USLIFE ADVISERS, INC. or assigns, delivered to the corporation at its principal office in New York, New York, the corporation shall forthwith stop using the name "USLIFE" in accordance with the provisions of such request, and shall cause these Articles of Incorporation to be amended so as to delete the name "USLIFE" from its corporate title. The provisions hereof are binding upon the corporation, its directors, officers, stockholders, creditors, and all other persons claiming under or through it. The terms of this paragraph do not preclude the use of the name "USLIFE" by any other person or organization, whether now existing or hereafter created, to which USLIFE ADVISERS, INC. may grant the right to use such name. TENTH: The duration of the corporation shall be perpetual. IN WITNESS WHEREOF, the undersigned incorporator ANTHONY J. STILO, who executed the foregoing Articles of Incorporation, hereby acknowledges the same to be his act and further acknowledges that, to the best of his knowledge the matters and facts set forth therein are true in all material respects under the penalties of perjury. Dated the 23rd day of October, 1972. /s/ ANTHONY J. STILO EX-99.2A 4 ex2-aii.txt EXHIBIT 2(A)(II) EXHIBIT (a)(ii) ARTICLES OF AMENDMENT DATED 10/09/1991 ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF USLIFE INCOME FUND, INC. USLIFE Income Fund, Inc., a Maryland corporation having its principal office at 125 Maiden Lane. New York, New York 10038 (hereinafter the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: The Articles of Incorporation of the Corporation are hereby amended by deleting the second paragraph of Article EIGHTH therefrom and replacing it with the following provisions: "To the fullest extent that limitations on the liability of directors and officers are permitted by the Maryland General Corporation Law, no director or officer of the corporation shall have any liability to the corporation or its shareholders for damages. This limitation on liability applies to events occurring at the time a person serves as a director or officer of the corporation whether or not such person is a director or officer at the time of any proceeding in which liability is asserted. The corporation shall indemnify and advance expenses to its currently acting and its former directors to the fullest extent that indemnification of directors is permitted by the Maryland General Corporation Law. The corporation shall indemnify and advance expenses to its officers to the same extent as its directors and to such further extent as is consistent with law. The Board of Directors may by by-law, resolution or agreement make further provisions for indemnification of directors, officers, employees and agents to the fullest extent permitted by the Maryland General Corporation Law. No provision of this Article shall be effective to protect or purport to protect any director or officer of the corporation against any liability to the corporation or its security holders to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. References to Maryland General Corporation Law in this Article are to the law as from time to time amended. No further amendment to the Articles of Incorporation shall affect any right of any person under this Article based on any event, omission or proceeding prior to such amendment." SECOND: The Amendment of the Articles of Incorporation as hereinabove set forth was unanimously approved by the Board of Directors of the Corporation at its regularly scheduled and duly convened meeting on August 14, 1991 and ratified and approved by a majority of all outstanding shares of the Corporation entitled to vote at the Corporation's Annual Meeting duly convened and held on October 9, 1991. IN WITNESS WHEREOF, USLIFE INCOME FUND, INC., has caused these presents to be signed and sealed in its name and on its behalf by its President and attested to by its Secretary on October 9, 1991, and signed under the penalties of perjury. USLIFE INCOME FUND, INC. By: /s/ Richard J. Chouinard President ATTEST: By: /s/ Richard G. Hohn Secretary EX-99.2A 5 ex2-aiii.txt EXHIBIT 2(A)(III) EXHIBIT (a)(iii) ARTICLES OF AMENDMENT DATED 11/24/1998 USLIFE INCOME FUND, INC., ARTICLES OF AMENDMENT USLIFE Income Fund. Inc., a Maryland corporation, with its business office at 2929 Allen Parkway, Houston, Texas 77019, hereby certifies to the State Department of Assessments and Taxation of Maryland that: The charter of the corporation is hereby amended as follows: 1. That the following paragraphs will be added in their entirety as Section 5 to the Seventh Article of the Articles of Incorporation: A vote of at least 75% of the stockholders, in addition to any vote of the Board of Directors as may be required by law or by the Bylaws, shall be necessary to effect any of the following actions: (a) any amendment to the Articles of Incorporation to convert the Corporation from a closed-end investment company form to an open-end investment company form (as such terms are defined in the Investment Company Act of 1940); (b) any stockholder proposal as to specific investment decisions made or to be made with respect to the Corporation's assets; or (c) any Business Combination. Business Combination shall mean the following: (a) any merger or consolidation of the Corporation with or into any other person; (b) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any other person of any assets of the Corporation except for portfolio transactions of the Corporation effected in the ordinary course of the Corporation's business; (c) the issuance or transfer by the Corporation (in one transaction or a series of transactions) of any shares of the Corporation to any other person in exchange for cash, securities or other property (or a combination thereof) excluding sales of any shares of the Corporation in connection with a public offering thereof. 2. That the following paragraph will be added in its entirety as the second paragraph to the Sixth Article of the Articles of Incorporation: The Board of Directors shall be divided into three classes. Within the limits above specified, the number of directors in each class shall be determined by resolution of the Board of Directors. The term of office of the first class shall expire on the date of the annual meeting of stockholders first succeeding their election. The term of office of the second class shall expire one year thereafter. The term of office of the third class shall expire two years thereafter. Upon expiration of the term of office in each class as set forth above, the number of directors in such class, as determined by the Board of Directors, shall be elected for a term of three years to succeed the directors whose terms of office expire. The directors shall be elected at the annual meeting of the stockholders, except as necessary to fill any vacancies as above specified, and each director elected shall hold office until his successor is duly elected and qualifies, or until his earlier resignation, death, or removal. These amendments of the charter of the corporation have been approved by the directors and shareholders. IN WITNESS WHEREOF, the undersigned President and Vice President/Secretary swear under penalties of perjury that the foregoing is a corporate act. Dated: November 20, 1998 USLIFE INCOME FUND, INC. /s/ Peter V. Tuters, President ATTEST: /s/ Cynthia A. Toles, Vice President and Secretary Submitted by: Linda Thompson The Variable Annuity Life Insurance Company 2929 Allen Parkway, L4-01 Houston, Texas 77019 EX-99.2A 6 ex2-aiv.txt EXHIBIT 2(A)(IV) EXHIBIT (a)(iv) ARTICLES SUPPLEMENTARY DATED 01/18/2000 USLIFE INCOME FUND, INC. ARTICLES SUPPLEMENTARY USLIFE Income Fund, Inc., a Maryland corporation (the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: Under a power contained in Title 3, Subtitle 8 of the Maryland General Corporation Law (the "MGCL"), the Corporation, by resolutions of its Board of Directors (the "Board of Directors"), duly adopted at a meeting duly called and held on January 18, 2000, elected to become subject to Sections 3-804 and 3-805 of the MGCL. SECOND: The resolutions described above provide that, notwithstanding any other provision in the charter or Bylaws of the Corporation to the contrary, subject to the provisions of the Investment Company Act of 1940, as amended, the Corporation elects to be subject to Sections 3-804 and 3-805 of the MGCL, the repeal of which may be effected only by the means authorized by Section 3-802(b)(3) of the MGCL. THIRD: These Articles Supplementary have been approved by the Board of Directors in the manner and by the vote required by law. FOURTH: The undersigned President of the Corporation acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury. IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be executed under seal in its name and on its behalf by its President and attested to by its Secretary on this 18th day of January, 2000. ATTEST: USLIFE INCOME FUND, INC. /s/ Cynthia Toles BY: /s/ Alice T. Kane Secretary President EX-99.2A 7 ex2-av.txt EXHIBIT 2(A)(V) EXHIBIT (a)(v) ARTICLES OF ADMENDMENT DATED 04/26/2002_ ARTICLES OF AMENDMENT OF USLIFE INCOME FUND, INC. USLIFE INCOME FUND, INC., a Maryland corporation, hereby certifies to the State Department of Assessments and Taxation of the State of Maryland that: 1. The charter of the Corporation is hereby amended as follows: The name of the Corporation is hereby changed to Boulder Growth & Income Fund, Inc. 2. This amendment to the charter of the Corporation has been approved by the directors and shareholders. 3. This amendment to the charter of the Corporation shall be effective as of April 29, 2002. Dated: April 26, 2002 We, the undersigned President and Secretary swear under penalties of perjury that the foregoing is a corporate act. /s/ Stephen C. Miller Stephen C. Miller President /s/ Stephanie Kelley Stephanie Kelley Secretary Boulder Growth & Income Fund, Inc. 1680 38th Street, Suite 800 Boulder, CO 80301 EX-99.2A 8 ex2-avi.txt EXHIBIT 2(A)(VI) EXHIBIT (a)(vi) ARTICLES OF AMENDMENT DATED 10/01/2002 BOULDER GROWTH & INCOME FUND, INC. ARTICLES OF AMENDMENT Boulder Growth & Income Fund, Inc., a Maryland corporation with its principal office in Baltimore, Maryland (hereinafter called the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: The charter of the Corporation is hereby amended by amending the current provisions of Article FIFTH of the Articles of Incorporation to read as follows: FIFTH: (a) The total number of shares of stock that the Corporation shall have authority to issue is ten million (10,000,000) shares, all initially designated Common Stock, of the par value of One Dollar ($1.00) each and of the aggregate par value of Ten Million Dollars ($10,000,000). The Board of Directors, with the approval of a majority of the entire Board, and without action by the stockholders, may amend the charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue. The Board of Directors of the Corporation is also authorized to classify or to reclassify from time to time any unissued shares of stock of the Corporation, whether now or hereafter authorized, by setting, changing or eliminating the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms and conditions of redemption of the stock. SECOND: The amendments to the charter of the Corporation set forth in these Articles of Amendment were advised by the Board of Directors and approved by the stockholders. The amendments do not increase the authorized stock of the Corporation or the aggregate par value thereof. IN WITNESS WHEREOF, Boulder Growth & Income Fund, Inc. has caused these presents to be signed in its name and on its behalf by its President and witnessed by its Secretary as of October 1, 2002. The undersigned President of Boulder Growth & Income Fund, Inc., hereby acknowledges in the name and on behalf of the Corporation the foregoing Articles of Amendment to be the corporate act of the Corporation and further certifies that to the best of his knowledge, information and belief, the matters and facts set forth therein with respect to the approval thereof are true in all material respects, under penalties of perjury. DATED: October 1, 2002 WITNESS: BOULDER GROWTH & INCOME FUND, INC. /s/ Stephanie Kelley /s/ Stephen C. Miller Stephanie Kelley, Secretary Stephen C. Miller, President EX-99.2A 9 ex2-avii.txt EXHIBIT 2(A)(VII) EXHIBIT (a)(vii) ARTICLES OF AMENDMENT DATED 10/21/2002 BOULDER GROWTH & INCOME FUND, INC. ARTICLES OF AMENDMENT Boulder Growth & Income Fund, Inc., a Maryland corporation with its principal office in Baltimore, Maryland (hereinafter called the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: Pursuant to Article FIFTH of the Articles of Incorporation of the Corporation, as amended, the charter of the Corporation is hereby amended by amending the current provisions of Article FIFTH of the Articles of Incorporation to read as follows: FIFTH: (a) The total number of shares of stock that the Corporation shall have authority to issue is 250 million (250,000,000) shares, all initially designated Common Stock, of the par value of One Cent ($0.01) each and of the aggregate par value of 2.5 Million Dollars ($2,500,000). The Board of Directors, with the approval of a majority of the entire Board, and without action by the stockholders, may amend the charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue. The Board of Directors of the Corporation is also authorized to classify or to reclassify from time to time any unissued shares of stock of the Corporation, whether now or hereafter authorized, by setting, changing or eliminating the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms and conditions of redemption of the stock. SECOND: Immediately prior to the above amendment, the total number of shares of stock that the Corporation had authority to issue was 10,000,000 shares, all initially designated Common Stock, with a par value of $1.00 each for an aggregate par value of $10,000,000; after the above amendment, the total number of shares of stock that the Corporation has authority to issue is 250,000,000 shares, all initially designated Common Stock, with a par value of $0.01 each for an aggregate par value of $2,500,000. THIRD: The above amendment to the Charter was unanimously approved by the Board of Directors. The above amendment is limited to changes expressly authorized by Maryland General Corporation Law Section 2-105(a)(12) and Section 2-605 to be made without action by stockholders. IN WITNESS WHEREOF, Boulder Growth & Income Fund, Inc. has caused these presents to be signed in its name and on its behalf by its President and witnessed by its Secretary as of October 21, 2002. The undersigned President of Boulder Growth & Income Fund, Inc., hereby acknowledges in the name and on behalf of the Corporation the foregoing Articles of Amendment to be the corporate act of the Corporation and further certifies that to the best of his knowledge, information and belief, the matters and facts set forth therein with respect to the approval thereof are true in all material respects, under penalties of perjury. DATE: October 21, 2002 WITNESS: /s/ Stephanie Kelley Stephanie Kelley, Secretary BOULDER GROWTH & INCOME FUND, INC. /s/ Stephen C. Miller Stephen C. Miller, President EX-99.2B 10 ex2-b.txt EXHIBIT 2(B) EXHIBIT (b) AMENDED AND RESTATED BYLAWS OF THE FUND AMENDED AND RESTATED BY-LAWS OF BOULDER GROWTH & INCOME FUND, INC. BYLAW 1. NAME OF COMPANY, LOCATION OF OFFICES AND SEAL. Article 1.1 Name. The name of the Company is Boulder Growth & Income Fund, Inc. Article 1.2 Principal Offices. The principal office of the Company in the State of Maryland shall be located in Baltimore, Maryland. The Company may, in addition, establish and maintain such other offices and places of business within or outside the State of Maryland as the Board of Directors may from time to time determine. Article 1.3 Seal. The corporate seal of the Company shall be circular in form and shall bear the name of the Company, the year of its incorporation and the words "Corporate Seal, Maryland." The form of the seal shall be subject to alteration by the Board of Directors and the seal may be used by causing it or a facsimile to be impressed or affixed or printed or otherwise reproduced. Any Officer or Director of the Company shall have authority to affix the corporate seal of the Company to any document requiring the same. BYLAW 2. STOCKHOLDERS. Article 2.1 Place of Meetings. All meetings of the stockholders shall be held at such place within the United States, whether within or outside the State of Maryland, as the Board of Directors shall determine which shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Article 2.2 Annual Meeting. The annual meeting of Stockholders of the Company shall be held at such place as the Board of Directors shall select on such date, during the 31-day period ending five months after the end of the Company's fiscal year, as may be fixed by the Board of Directors each year, at which time the Stockholders shall elect Directors by plurality vote, and transact such other business as may properly come before the meeting. Any business of the Company may be transacted at the annual meeting without being specially designated in the notice except as otherwise provided by statute by the Articles of Incorporation or by these By-Laws. Article 2.3 Special Meetings. Special meetings of the Stockholders for any purpose or purposes, unless otherwise prescribed by statute or by the Articles of Incorporation, may be called by resolution of the Board of Directors or by the President, and shall be called by the Secretary at the request, in writing, of a majority of the Board of Directors or at the request, in writing, of Stockholders owning a majority of the votes entitled to be cast at the meeting, upon payment by such Stockholders to the Company of the reasonably estimated cost of preparing and mailing a notice of the meeting (which estimated cost shall be provided to such Stockholders by the Secretary of the Company). Notwithstanding the foregoing, unless requested by Stockholders entitled to cast a majority of the votes entitled to be cast at the meeting, a special meeting of the Stockholders need not be called at the request of Stockholders to consider any matter that is substantially the same as a matter voted on at any special meeting of the Stockholders held during the preceding 12 months. A written request shall state the purpose or purposes of the proposed meeting. Article 2.4 Notice. Written notice of every meeting of Stockholders, stating the purpose or purposes for which the meeting is called, the time when and the place where it is to be held, shall be served, either personally or by mail, not less than 10 nor more than 90 days before the meeting, upon each Stockholder as of the record date fixed for the meeting who is entitled to notice of or to vote at such meeting. If mailed, (i) such notice shall be directed to a Stockholder at his address as it shall appear on the books of the Company (unless he shall have filed with the Transfer Agent of the Company a written request that notices intended for him be mailed to some other address, in which case it shall be mailed to the address designated in such request) and (ii) such notice shall be deemed to have been given as of the date when it is deposited in the United States mail with first-class postage thereon prepaid. Article 2.5 Notice of Stockholder Business. At any annual or special meeting of the Stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual or special meeting, the business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (iii) otherwise properly brought before the meeting by a Stockholder. For business to be properly brought before an annual or special meeting by a Stockholder, the Stockholder must have given timely notice thereof in writing to the Secretary of the Company. To be timely, any such notice must be delivered to or mailed and received at the principal executive offices of the Company not later than 60 days prior to the date of the meeting; provided, however, that if less than 70 days' notice or prior public disclosure of the date of the meeting is given or made to Stockholders, any such notice by a Stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which notice of the date of the annual or special meeting was given or such public disclosure was made. Any such notice by a Stockholder shall set forth as to each matter the Stockholder proposes to bring before the annual or special meeting (i) a brief description of the business desired to be brought before the annual or special meeting and the reasons for conducting such business at the annual or special meeting, (ii) the name and address, as they appear on the Company's books, of the Stockholder proposing such business, (iii) the class and number of shares of the capital stock of the Company which are beneficially owned by the Stockholder, and (iv) any material interest of the Stockholder in such business. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at any annual or special meeting except in accordance with the procedures set forth in this Article. The chairman of the annual or special meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Article, and, if he should so determine, he shall so declare to the meeting that any such business not properly brought before meeting shall not be considered or transacted. Article 2.6 Quorum. The holders of one-half of the stock issued and outstanding and entitled to vote, present in person or by proxy, shall be requisite and shall constitute a quorum at all meetings of the Stockholders for the transaction of business except as otherwise provided by statute, by the Articles of Incorporation or by these Bylaws. If a quorum shall not be present or represented, the Stockholders entitled to vote thereat, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, to a date not more than 120 days after the original record date, until a quorum shall be present or represented. At such adjourned meeting, at which a quorum shall be present or represented, any business which might have been transacted at the original meeting may be transacted. Article 2.7 Vote of the Meeting. When a quorum is present or represented at any meeting, a majority of the votes cast thereat shall decide any question brought before such meeting (except for the election of directors, which shall be by plurality vote), unless the question is one upon which, by express provisions of applicable statutes, of the Articles of Incorporation or of these Bylaws, a different vote is required, in which case such express provisions shall govern and control the decision of such question. Article 2.8 Voting Rights of Stockholders. Each Stockholder of record having the right to vote shall be entitled at every meeting of the Stockholders of the Company to one vote for each share of stock having voting power standing in the name of such Stockholder on the books of the Company on the record date fixed in accordance with Article 6.5 of these Bylaws, with pro rata voting rights for any fractional shares, and such votes may be cast either in person or by proxy. Article 2.9 Organization. At every meeting of the Stockholders, the Chairman of the Board, or in his absence or inability to act, the Vice Chairman of the Board, if any, or in his absence or inability to act, a chairman chosen by the Stockholders, shall act as chairman of the meeting. The Secretary, or in his absence or inability to act, a person appointed by the chairman of the meeting, shall act as secretary of the meeting and keep the minutes of the meeting. Article 2.10 Proxies. Every proxy may be in writing and signed by the Stockholder or by his duly authorized attorney-in-fact, or authorized by telephone or via the Internet or otherwise electronically in a manner permitted by Maryland law approved from time to time by the Board of Directors. No proxy shall be valid after the expiration of eleven months from the date of its execution unless it provides otherwise. Every proxy shall be revocable at the pleasure of the person authorizing it or of his personal representatives or assigns. Proxies shall be delivered prior to the meeting to the Secretary of the Company or to the person acting as Secretary of the meeting before being voted. A proxy with respect to stock held in the name of two or more persons shall be valid if authorized by one of them unless, at or prior to exercise of such proxy, the Company receives a specific written notice to the contrary from any one of them. A proxy purporting to be authorized by or on behalf of a Stockholder shall be deemed valid unless challenged at or prior to its exercise. Article 2.11 Stock Ledger and List of Stocks. It shall be the duty of the Secretary or Assistant Secretary of the Company to cause an original or duplicate stock ledger to be maintained at the office of the Company's Transfer Agent. Article 2.12 Action without Meeting. Any action to be taken by Stockholders may be taken without a meeting if (i) all Stockholders entitled to vote on the matter consent to the action in writing, (ii) all Stockholders entitled to notice of the meeting but not entitled to vote at it sign a written waiver of any right to dissent and (iii) such consents and waivers are filed with the records of the meetings of Stockholders. A consent shall be treated for all purposes as a vote at a meeting. BYLAW 3. BOARD OF DIRECTORS. Article 3.1 General Powers. Except as otherwise provided in the Articles of Incorporation, the business and affairs of the Corporation shall be managed under the direction of the Board of Directors. All powers of the Company may be exercised by or under authority of the Board of Directors except as conferred on or reserved to the Stockholders by law, by the Articles of Incorporation or by these Bylaws. Article 3.2 Board of Three to Twelve Directors. The Board of Directors shall consist of not less than three (3) nor more than twelve (12) Directors; provided that if there are less than three stockholders, the number of Directors may be the same number as the number of stockholders but not less than one. Directors need not be Stockholders. Subject to the first sentence of this Article 3.2, a majority of the entire Board of Directors shall have power from time to time, and at any time when the Stockholders as such are not assembled in a meeting, regular or special, to increase or decrease the number of Directors. If the number of Directors is increased, the additional Directors may be elected by a majority of the Directors in office at the time of the increase. If such additional Directors are not so elected by the Directors in office at the time they increase the number of places on the Board, then in such event the additional Directors shall be elected or re-elected by the Stockholders at their next annual meeting or at an earlier special meeting called for that purpose. Beginning with the first annual meeting of Stockholders held after the initial public offering of the shares of the Company (the "initial annual meeting"), the Board of Directors shall be divided into three classes: Class I, Class II and Class III. The terms of Office of the classes of Directors elected at the initial annual meeting shall expire at the times of the annual meetings of the Stockholders as follows: Class I on the next annual meeting, Class II on the second next annual meeting and Class III on the third next annual meeting, or thereafter in each case when their respective successors are elected and qualified. At each subsequent annual election, the Directors chosen to succeed those whose terms are expiring shall be identified as being of the same class as the Directors whom they succeed and shall be elected for a term expiring at the time of the third succeeding annual meeting of Stockholders, or thereafter in each case when their respective successors are elected and qualified. The number of directorships shall be apportioned among the classes so as to maintain the classes as nearly equal in number as possible. If the Corporation issues Preferred Stock entitling the holders to elect additional Directors in special circumstances and those special circumstances arise, then the number of directors that the holders of the Common Stock are entitled to elect shall be reduced to a number such that, when the requisite number of directors has been elected by Preferred Stock holders, the total number of directors shall not exceed 12 in number. Article 3.3 Director Nominations. 3.3.1 Only persons who are nominated in accordance with the procedures set forth in this Article shall be eligible for election or re-election as Directors. Nominations of persons for election or re-election to the Board of Directors of the Company may be made at a meeting of Stockholders by or at the direction of the Board of Directors or by any Stockholder of the Company who is entitled to vote for the election of such nominee at the meeting and who complies with the notice procedures set forth in this Article. 3.3.2 Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice delivered in writing to the Secretary of the Company. To be timely, any such notice by a Stockholder must be delivered to or mailed and received at the principal executive offices of the Company not later than 60 days prior to the meeting; provided, however, that if less than 70 days' notice or prior public disclosure of the date of the meeting is given or made to Stockholders, any such notice by a Stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which notice of the date of the meeting was given or such public disclosure was made. 3.3.3 Any such notice by a Stockholder shall set forth (i) as to each person whom the Stockholder proposes to nominate for election or re-election as a Director, (A) the name, age, business address and residence address of such person, (B) the principal occupation or employment of such person, (C) the class and number of shares, if any, of the capital stock of the Company which are beneficially owned by such person and (D) any other information relating to such person that is required to be disclosed in solicitations of proxies for the election of Directors pursuant to Section 20(a) of the Investment Company Act of 1940, as amended, and the rules and regulations thereunder, or Regulation 14A under the Securities Exchange Act of 1934 or any successor regulation thereto (including without limitation such person's written consent to being named in the proxy statement as a nominee and to serving as a Director if elected and whether any person intends to seek reimbursement from the Company of the expenses of any solicitation of proxies should such person be elected a Director of the Company; and (ii) as to the Stockholder giving the notice, (A) the name and address, as they appear on the Company's books, of such Stockholder and (B) the class and number of shares of the capital stock of the Company which are beneficially owned by such Stockholder. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a Director shall furnish to the Secretary of the Company the information required to be set forth in a Stockholder's notice of nomination which pertains to the nominee. 3.3.4 If a notice by a Stockholder is required to be given pursuant to this Article, no person shall be entitled to receive reimbursement from the Company of the expenses of a solicitation of proxies for the election as a Director of a person named in such notice unless such notice states that such reimbursement will be sought from the Company. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by the Bylaws, and, if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded for all purposes. Article 3.4 Vacancies. Subject to the provisions of the Investment Company Act of 1940, as amended, if the office of any Director or Directors becomes vacant for any reason (other than an increase in the number of Directors), the Directors in office, although less than a quorum, shall continue to act and may choose a successor or successors, who shall hold office until the next election of Directors, or any vacancy may be filled by the Stockholders at any meeting thereof. Article 3.5 Removal. At any meeting of Stockholders duly called and at which a quorum is present, the Stockholders may, by the affirmative vote of the holders of at least 80% of the votes entitled to be cast thereon, remove any Director or Directors from office, with or without cause, and may by a plurality vote elect a successor or successors to fill any resulting vacancies for the unexpired term of the removed Director. Article 3.6 Resignation. A Director may resign at any time by giving written notice of his resignation to the Board of Directors or the Chairman or the Vice Chairman, if any, the Board or the Secretary of the Company. Any resignation shall take effect at the time specified in it or, should the time when it is to become effective not be specified in it, immediately upon its receipt. Acceptance of a resignation shall not be necessary to make it effective unless the resignation states otherwise. Article 3.7 Place of Meetings. The Directors may hold their meetings at the principal office of the Company or at such other places, either within or outside the State of Maryland, as they may from time to time determine. Article 3.8 Regular Meetings. Regular meetings of the Board may be held at such date and time as shall from time to time be determined by resolution of the Board. Article 3.9 Special Meetings. Special meetings of the Board may be called by order of the Chairman or Vice Chairman, if any, of the Board on one day's notice given to each Director either in person or by mail, telephone, telegram, cable or wireless to each Director at his residence or regular place of business. Special meetings will be called by the Chairman or Vice Chairman, if any, of the Board or Secretary in a like manner on the written request of a majority of the Directors. Article 3.10 Quorum. At all meetings of the Board, the presence of a majority of the entire Board of Directors shall be necessary to constitute a quorum and sufficient for the transaction of business, and any act of a majority present at a meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute, by the Articles of Incorporation or by these Bylaws. If a quorum shall not be present at any meeting of Directors, the Directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Article 3.11 Organization. The Board of Directors shall designate one of its members to serve as Chairman of the Board. The Chairman of the Board shall preside at each meeting of the Board. In the absence or inability of the Chairman of the Board to act, another Director chosen by a majority of the Directors present, shall act as chairman of the meeting and preside at the meeting. The Secretary (or, in his absence or inability to act, any person appointed by the chairman) shall act as secretary of the meeting and keep the minutes of the meeting. Article 3.12 Informal Action by Directors and Committees. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may, except as otherwise required by statute, be taken without a meeting if a written consent to such action is signed by all members of the Board, or of such committee, as the case may be, and filed with the minutes of the proceedings of the Board or committee. Subject to the Investment Company Act of 1940, as amended, members of the Board of Directors or a committee thereof may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Article 3.13 Executive Committee. There may be an Executive Committee of two or more Directors appointed by the Board who may meet at stated times or on notice to all by any of their own number. The Executive Committee shall consult with and advise the Officers of the Company in the management of its business and exercise such powers of the Board of Directors as may be lawfully delegated by the Board of Directors. Vacancies shall be filled by the Board of Directors at any regular or special meeting. The Executive Committee shall keep regular minutes of its proceedings and report the same to the Board when required. Article 3.14 Audit Committee. There shall be an Audit Committee of two or more Directors who are not "interested persons" of the Company (as defined in the Investment Company Act of 1940, as amended) appointed by the Board who may meet at stated times or on notice to all by any of their own number. The committee's duties shall include reviewing both the audit and other work of the Company's independent accountants, recommending to the Board of Directors the independent accountants to be retained, and reviewing generally the maintenance and safekeeping of the Company's records and documents. Article 3.15 Other Committees. The Board of Directors may appoint other committees which shall in each case consist of such number of members (but not less than two) and shall have and may exercise, to the extent permitted by law, such powers as the Board may determine in the resolution appointing them. A majority of all members of any such committee may determine its action, and fix the time and place of its meetings, unless the Board of Directors shall otherwise provide. The Board of Directors shall have power at any time to change the members and, to the extent permitted by law, to change the powers of any such committee, to fill vacancies and to discharge any such committee. Article 3.16 Compensation of Directors. The Board may, by resolution, determine what compensation and reimbursement of expenses of attendance at meetings, if any, shall be paid to Directors in connection with their service on the Board or on various committees of the Board. Nothing herein contained shall be construed to preclude any Director from serving the Company in any other capacity or from receiving compensation therefor. BYLAW 4. OFFICERS. Article 4.1 Officers. The officers of the Company shall be fixed by the Board of Directors and shall include a President, Secretary and Treasurer. Any two offices may be held by the same person except the offices of President and Vice President. A person who holds more than one office in the Company may not act in more than one capacity to execute, acknowledge or verify an instrument required by law to be executed, acknowledged or verified by more than one officer. Article 4.2 Appointment of Officers. The Directors shall appoint the officers, who need not be members of the Board. Article 4.3 Additional Officers. The Board may appoint such other officers and agents as it shall deem necessary who shall exercise such powers and perform such duties as shall be determined from time to time by the Board. Article 4.4 Salaries of Officers. The salaries of all Officers of the Company shall be fixed by the Board of Directors. Article 4.5 Term, Removal, Vacancies. The Officers of the Company shall serve at the pleasure of the Board of Directors and hold office for one year and until their successors are chosen and qualify in their stead. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the entire Board of Directors. If the office of any Officer becomes vacant for any reason, the vacancy shall be filled by the Board of Directors. Article 4.6 President. The President shall be the chief executive officer of the Company. The President shall, subject to the supervision of the Board of Directors, have general responsibility for the management of the business of the Company. The President shall see that all orders and resolutions of the Board are carried into effect. Article 4.7 Vice President. Any Vice President shall, in the absence or disability of the President, perform the duties and exercise the powers of the President and shall perform such other duties as the Board of Directors shall prescribe. Article 4.8 Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts or receipts and disbursements in books belonging to the Company and shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Company as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the Chairman of the Board and Directors at the regular meetings of the Board, or whenever they may require it, an account of the financial condition of the Company. Any Assistant Treasurer may perform such duties of the Treasurer as the Treasurer or the Board of Directors may assign, and, in the absence of the Treasurer, may perform all the duties of the Treasurer. Article 4.9 Secretary. The Secretary shall attend meetings of the Board and meeting of the Stockholders and record all votes and the minutes of all proceedings in a book to be kept for those purposes, and shall perform like duties for the Executive Committee, or other committees, of the Board when required. He shall give or cause to be given notice of all meetings of Stockholders and special meetings of the Board of Directors and shall perform such other duties as may be prescribed by the Board of Directors. He shall keep in safe custody the seal of the Company and affix it to any instrument when authorized by the Board of Directors. Any Assistant Secretary may perform such duties of the Secretary as the Secretary or the Board of Directors may assign and, in the absence of the Secretary, may perform all the duties of the Secretary. Article 4.10 Subordinate Officers. The Board of Directors from time to time may appoint such other officers or agents as it may deem advisable, each of whom shall serve at the pleasure of the Board of Directors and have such title, hold such office for such period, have such authority and perform such duties as the Board of Directors may determine. The Board of Directors from time to time may delegate to one or more officers or agents the power to appoint any such subordinate officers or agents and to prescribe their respective rights, terms of office, authorities and duties. Article 4.11 Surety Bonds. The Board of Directors may require any officer or agent of the Company to execute a bond (including, without limitation, any bond required by the Investment Company Act of 1940, as amended, and the rules and regulations of the Securities and Exchange Commission) to the Company in such sum and with such surety or sureties as the Board of Directors may determine, conditioned upon the faithful performance of his duties to the Company, including responsibility for negligence and for the accounting of any of the Company's property, funds or securities that may come into his hands. BYLAW 5. GENERAL PROVISIONS. Article 5.1 Waiver of Notice. Whenever the Stockholders or the Board of Directors are authorized by statute, the provisions of the Articles of Incorporation or these Bylaws to take any action at any meeting after notice, such notice may be waived, in writing, before or after the holding of the meeting, by the person or persons entitled to such notice, or, in the case of a Stockholder, by his duly authorized attorney-in-fact. Article 5.2 Indemnity. 5.2.1 The Company shall indemnify its directors to the fullest extent that indemnification of directors is permitted by the Maryland General Corporation Law. The Company shall indemnify its officers to the same extent as its directors and to such further extent as is consistent with law. The Company shall indemnify its directors and officers who, while serving as directors or officers, also serve at the request of the Company as a director, officer, partner, trustee, employee, agent or fiduciary of another corporation, partnership, joint venture, trust, other enterprise or employee benefit plan to the fullest extent of the law. The indemnification and other rights provided by this Article shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. This Article shall not protect any such person against any liability to the Company or any Stockholder thereof to which such person would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office ("disabling conduct"). 5.2.2 Any current or former director or officer of the Company seeking indemnification within the scope of this Article shall be entitled to advances from the Company for payment of reasonable expenses incurred by him in connection with the matter as to which he is seeking indemnification in the manner and to the fullest extent permissible under the Maryland General Corporation Law without a preliminary determination of entitlement to indemnification (except as provided below). The person seeking indemnification shall provide to the Company a written affirmation of his good faith belief that the standard of conduct necessary for indemnification by the Company has been met and a written undertaking to repay any such advance if it should ultimately be determined that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (i) the person seeking indemnification shall provide security in form and amount acceptable to the Company for his undertaking; (ii) the Company is insured against losses arising by reason of the advance; or (iii) a majority of a quorum of directors of the Company who are neither "interested persons" as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended, nor parties to the proceeding ("disinterested non-party directors"), or independent legal counsel, in a written opinion, shall have determined, based on a review of facts readily available to the Company at the time the advance is proposed to be made, that there is reason to believe that the person seeking indemnification will ultimately be found to be entitled to indemnification. 5.2.3 At the request of any person claiming indemnification under this Article, the Board of Directors shall determine, or cause to be determined, in a manner consistent with the Maryland General Corporation Law, whether the standards required by this Article have been met. Indemnification shall be made only following: (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the person to be indemnified was not liable by reason of disabling conduct or (ii) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the person to be indemnified was not liable by reason of disabling conduct by (A) the vote of a majority of a quorum of disinterested non-party directors and (B) an independent legal counsel in a written opinion. 5.2.4 Employees and agents who are not officers or directors of the Company may be indemnified, and reasonable expenses may be advanced to such employees or agents, as may be provided by action of the Board of Directors or by contract, subject to any limitations imposed by the Investment Company Act of 1940, as amended. 5.2.5 The Board of Directors may make further provision consistent with law for indemnification and advance of expenses to directors, officers, employees and agents by resolution, agreement or otherwise. The indemnification provided by this Article shall not be deemed exclusive of any other right, with respect to indemnification or otherwise, to which those seeking indemnification may be entitled under any insurance or other agreement or resolution of stockholders or disinterested directors or otherwise. 5.2.6 References in this Article are to the Maryland General Corporation Law and to the Investment Company Act of 1940, as amended. No amendment to these Bylaws shall affect any right of any person under this Article based on any event, omission or proceeding prior to the amendment. Article 5.3 Insurance. The Company may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Company or who, while a director, officer, employee or agent of the Company, is or was serving at the request of the Company as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise or employee benefit plan, against any liability asserted against and incurred by such person in any such capacity or arising out of such person's position; provided that no insurance may be purchased by the Company on behalf of any person against any liability to the Company or to its Stockholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. Article 5.4 Checks. All checks or demands for money and notes of the Company shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Article 5.5 Fiscal Year. The fiscal year of the Company shall be determined by resolution of the Board of Directors. BYLAW 6. CERTIFICATES OF STOCK. Article 6.1 Certificates of Stock. The interest, except fractional interests, of each stockholder of the Company shall be evidenced by certificates for shares of stock in such form as the Board of Directors may from time to time prescribe. The certificates shall be numbered and entered in the books of the Company as they are issued. They shall exhibit the holder's name and the number of whole shares and no certificate shall be valid unless it has been signed by the Chairman of the Board, the President or a Vice President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer of the Corporation and sealed with its seal, or bears the facsimile signatures of such officers and a facsimile of such seal. In case any of the officers of the Company whose manual or facsimile signature appears on any stock certificate delivered to a Transfer Agent of the Company shall cease to be such Officer prior to the issuance of such certificate, the Transfer Agent may nevertheless countersign and deliver such certificate as though the person signing the same or whose facsimile signature appears thereon had not ceased to be such officer, unless written instructions of the Company to the contrary are delivered to the Transfer Agent. Article 6.2 Lost, Stolen or Destroyed Certificates. The Board of Directors, or the President together with the Treasurer or Secretary, may direct a new certificate to be issued in place of any certificate theretofore issued by the Company, alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed, or by his legal representative. When authorizing such issue of a new certificate, the Board of Directors, or the President and Treasurer or Secretary, may, in its or their discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to advertise the same in such manner as it or they shall require and/or give the Company a bond in such sum and with such surety or sureties as it or they may direct as indemnity against any claim that may be made against the Company with respect to the certificate alleged to have been lost, stolen or destroyed for such newly issued certificate. Article 6.3 Transfer of Stock. Shares of the Company shall be transferable on the books of the Company by the holder thereof in person or by his duly authorized attorney or legal representative upon surrender and cancellation of a certificate or certificates for the same number of shares of the same class, duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, with such proof of the authenticity of the transferor's signature as the Company or its agents may reasonably require. The shares of stock of the Company may be freely transferred, and the Board of Directors may, from time to time, adopt rules and regulations with reference to the method of transfer of the shares of stock of the Company. Article 6.4 Registered Holder. The Company shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, except as expressly provided by statute. Article 6.5 Record Date. The Board of Directors may fix a time not less than 10 nor more than 90 days prior to the date of any meeting of stockholders as the time as of which Stockholders are entitled to notice of, and to vote at, such a meeting; and all such persons who were holders of record of voting stock at such time, and no other, shall be entitled to notice of, and to vote at, such meeting or to express their consent or dissent, as the case may be. If no record date has been fixed, the record date for the determination of Stockholders entitled to notice of, or to vote at, a meeting of Stockholders shall be the later of the close of business on the day on which notice of the meeting is mailed or the thirtieth (30th) day before the meeting, or, if notice is waived by all Stockholders at the close of business on the tenth (10th) day immediately preceding the day on which the meeting is held. The Board of Directors may also fix a time not exceeding 90 days preceding the date fixed for the payment of any dividend or the making of any distribution, or for the delivery of evidences of rights, or evidences of interests arising out of any change, conversion or exchange of capital stock, as a record time for the determination of the Stockholder entitled to receive any such dividend. distribution, rights or interests. Article 6.6 Stock Ledgers. The stock ledgers of the Company, containing the names and addresses of the Stockholders and the number of shares held by them respectively, shall be kept at the principal offices of the Company or at such other location as may be authorized by the Board of Directors from time to time, except that an original or duplicate stock ledger shall be maintained at the office of the Company's Transfer Agent. Article 6.7 Transfer Agents and Registrars. The Board of Directors may from time to time appoint or remove Transfer Agents and/or Registrars of transfers (if any) of shares of stock of the Company, and it may appoint the same person as both Transfer Agent and Registrar. Upon any such appointment being made, all certificates representing shares of capital stock thereafter issued shall be countersigned by one of such Transfer Agents or by one of such Registrars of transfers (if any) or by both and shall not be valid unless so countersigned. If the same person shall be both Transfer Agent and Registrar, only one countersignature by such person shall be required. BYLAW 7. CERTAIN TRANSACTIONS Article 7.1 Certain Transactions. Except as otherwise provided in this Bylaw, at least eighty percent (80%) of the votes of the Company's Common Stock, in addition to the affirmative vote of at least eighty percent (80%) of the entire Board of Directors, shall be necessary to effect any of the following actions: 7.1.1 Any amendment to these Bylaws or the Articles of Incorporation to make the Company's Common Stock a "redeemable security" or to convert the Company from a "closed-end company" to an "open-end company" (as such terms are defined in the Investment Company Act of 1940, as amended), unless the Continuing Directors (as hereinafter defined) of the Company, by a vote of at least eighty percent (80%) of such Directors, approve such amendment in which case the affirmative vote of a majority of the votes entitled to be cast by the holders of the Company's Common Stock to be voted on the matter shall be required to approve such actions unless otherwise provided in the Articles of Incorporation or unless otherwise required by law; 7.1.2 Any stockholder proposal as to specific investment decisions made or to be made with respect to the Company's assets; 7.1.3 Any proposal as to the voluntary liquidation or dissolution of the Company or any amendment to the Articles of Incorporation to terminate the existence of the Company, unless the Continuing Directors of the Company, by a vote of at least eighty percent (80%) of such Directors, approve such proposal in which case the affirmative vote of a majority of the votes entitled to be cast by stockholders shall be required to approve such actions unless otherwise provided in the Articles of Incorporation or unless otherwise required by law; or 7.1.4 Any Business Combination (as hereinafter defined) unless either the condition in clause (A) below is satisfied, or all of the conditions in clauses (B), (C), (D), (E) and (F) below are satisfied, in which case Article 7.5 below shall apply: (A) The Business Combination shall have been approved by a vote of at least eighty percent (80%) of the Continuing Directors. (B) The aggregate amount of cash and the Fair Market Value (as hereinafter defined), as of the date of the consummation of the Business Combination, of consideration other than cash to be received per share by holders of any class of outstanding Voting Stock (as hereinafter defined) in such Business Combination shall be at least equal to the higher of the following: (x) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by an Interested Party (as hereinafter defined) for any shares of such Voting Stock acquired by it (aa) within the two-year period immediately prior to the first public announcement of the proposal of the Business Combination (the "Announcement Date"), or (bb)(i) in the Threshold Transaction (as hereinafter defined), or (ii) in any period between the Threshold Transaction and the consummation of the Business Combination, whichever is higher; and (xi) the net asset value per share of such Voting Stock on the Announcement Date or on the date of the Threshold Transaction, whichever is higher. (C) The consideration to be received by holders of the particular class of outstanding Voting Stock shall be in case or in the same form as the Interested Party has previously paid for shares of any class of Voting Stock. If the Interested Party had paid for shares of any class of Voting Stock with varying forms of consideration, the form of consideration for such class of Voting Stock shall be either cash or the form used to acquire the largest number of shares of such class of Voting Stock previously acquired by it. (D) After the occurrence of the Threshold Transaction, and prior to the consummation of such Business Combination, such Interested Party shall not have become the beneficial owner of any additional shares of Voting Stock except by virtue of the Threshold Transaction. (E) After the occurrence of the Threshold Transaction, such Interested Party shall not have received the benefit, directly or indirectly (except proportionately as a shareholder of the Company), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by the Company, whether in anticipation of or in connection with such Business Combination or otherwise. (F) A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, as amended, and the rules and regulations thereunder (or any subsequent provisions replacing such Acts, rules or regulations) shall be prepared and mailed by the Interested Party, at such Interested Party's expense, to the shareholders of the Company at least 30 days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Acts or subsequent provisions). Article 7.2 Definitions. For the purposes of this Bylaw: 7.2.1 "Business Combination" shall mean any of the transactions described or referred to in any one or more of the following subparagraphs: (A) any merger, consolidation or share exchange of the Company with or into any other person; (B) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions in any 12 month period) to or with any other person of any assets of the Company having an aggregate Fair Market Value of $1,000,000 or more except for portfolio transactions of the Company effected in the ordinary course of the Company's business; (C) the issuance or transfer by the Company (in one transaction or a series of transactions in any 12 month period) of any securities of the Company to any other person in exchange for cash, securities, or other property (or a combination thereof) having an aggregate Fair Market Value of $1,000,000 or more excluding (x) sales of any securities of the Company in connection with a public offering or private placement thereof, (y) issuances of any securities of the Company pursuant to a dividend reinvestment and cash purchase plan adopted by the Company and (z) issuances of any securities of the Company upon the exercise of any stock subscription rights distributed by the Company. 7.2.2 "Continuing Director" means any member of the Board of Directors of the Company who is not an Interested Party or an Affiliate (as hereinafter defined) of an Interested Party and (a) has been a member of the Board of Directors for a period of at least 12 months or (b) was elected at the Special Meeting of Shareholders on January 23, 2002, or is a successor of a Continuing Director who is unaffiliated with an Interested Party and is recommended to succeed a Continuing Director by a majority of the Continuing Directors then on the Board of Directors. 7.2.3 "Interested Party" shall mean any person, other than an investment company advised by an investment adviser approved by the Board of Directors at the January 23, 2002 meeting of the Board of Directors, or any of its Affiliates, which enter, or proposes to enter, into a Business Combination with the Company. 7.2.4 "Person" shall mean an individual, a corporation, a trust or a partnership. 7.2.5 "Voting Stock: shall mean capital stock of the Company entitled to vote generally in the election of directors. 7.2.6 A person shall be a "beneficial owner" of any Voting Stock: (A) which such person or any of its Affiliates or Associates (as hereinafter defined) beneficially owns, directly or indirectly; or (B) which such person or any of its Affiliates or Associates has the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement, or understanding or upon the exercise conversion rights, exchange rights, warrants or options, or (C) which is beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Voting Stock. 7.2.7 "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934. 7.2.8 "Fair Market Value" means: (A) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the relevant date of a share of such stock on the New York Stock Exchange, or if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing sale price (if such stock is a National Market System security) or the highest closing bid quotation (if such stock is not a National Market System security) with respect to a share of such stock during the 30-day period preceding the relevant date on the National Association of Securities Dealers, Inc. Automated Quotation System (NASDAQ) or any system then in use, or if no such quotations are available, the fair market value on the relevant date of the share of such stock as determined by at least eighty percent (80%) of the Continuing Directors in good faith, and (B) in the case of property other than cash or stock, the fair market value of such property on the relevant date as determined by at least eighty percent (80%) of the Continuing Directors in good faith. 7.2.9 "Threshold Transaction" means the transaction by or as a result of which an Interested Party first becomes the beneficial owner of Voting Stock. Article 7.3 In the event of any Business Combination in which the Company survives, the phrase "consideration other than cash to be received" as used in subparagraph 7.1.4(B) above shall include the shares of Common Stock and/or the shares of any other class of outstanding Voting Stock retained by the holders of such shares. Article 7.4 Continuing Directors of the Company, acting by a vote of at least 80% of the Continuing Directors, shall have the power and duty to determine, on the basis of information known to them after reasonable inquiry, all facts necessary to determine (a) the number of shares of Voting Stock beneficially owned by any person, (b) whether a person is an Affiliate or Associate of another, (c) whether the requirements of subparagraph 7.1.4 above have been met with respect to any Business Combination, and (d) whether the assets which are the subject of any Business Combination have, or the consideration to be received for the issuance or transfer of securities by the Company in any Business Combination has, an aggregate Fair Market Value of $1,000.000 or more. Article 7.5 If any Business Combination described in subparagraph 7.2.1(A) or 7.2.1(B) (if the transfer or other disposition constitutes a transfer of all or substantially all of the assets of the Company with respect to which shareholder approval is required under the Maryland General Company Law) is approved by a vote of eighty percent (80%) of the Continuing Directors or all of the conditions in subparagraph 7.1.4(B), (C), (D), (E) and (F) are satisfied, a majority of the votes entitled to be cast by stockholders shall be required to approve such transaction unless otherwise provided in the Charter or unless otherwise required by law. If any other Business Combination is approved by a vote of eighty percent (80%) of the Continuing Directors or all of the conditions in subparagraph 7.1.4(B), (C), (D), (E) and (F) are satisfied, no stockholder vote shall be required to approve such transaction unless otherwise provided in the Charter or unless otherwise required by law. BYLAW 8. AMENDMENTS. Article 8.1 General. Except as provided in the next succeeding sentence and in the Articles of Incorporation, all Bylaws of the Company, whether adopted by the Board of Directors or the stockholders, shall be subject to amendment, alteration or repeal, and new Bylaws may be made, by the affirmative vote of a majority of either: (a) the holders of record of the outstanding shares of stock of the Company entitled to vote, at any annual or special meeting, the notice or waiver of notice of which shall have specified or summarized the proposed amendment, alteration, repeal or new Bylaw; or (b) the Directors, at any regular or special meeting, the notice or waiver of notice of which shall have specified or summarized the proposed amendment, alteration, repeal or new Bylaw. The provisions of Bylaws Article 2.5, Article 3.2, Article 3.3, Article 3.5, BYLAW 7 and Article 8.1 of these Bylaws shall be subject to amendment, alteration or repeal by (i) the affirmative vote of the holders of record of eighty percent (80%) of the outstanding shares of stock of the Company entitled to vote, at any annual or special meeting, the notice or waiver of notice of which shall have specified or summarized the proposed amendment, alteration or repeal or (ii) the Board of Directors including the affirmative vote of eighty percent (80%) of the Continuing Directors, at any regular or special meeting, the notice or waiver of notice of which shall have specified or summarized the proposed amendment, alteration or repeal. Dated: January 23, 2002 Amended July 22, 2002 Amended August 12, 2002 Amended October 14, 2002 EX-99.2D 11 ex2-di.txt EXHIBIT 2(D)(I) EXHIBIT (d)(i) SPECIMEN CERTIFICATE FOR COMMON SHARES CERTIFICATE FOR NOT MORE THAN 10,000 SHARES NUMBER SHARES NU COMMON STOCK CUSIP 101507 10 1 TRANSFERABLE IN NEW YORK, NY SEE REVERSE FOR OR RIDGEFIELD PARK, NJ CERTAIN DEFINITIONS BOULDER GROWTH & INCOME FUND, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND THIS CERTIFIES That Is the Owner of FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK OF BOULDER GROWTH & INCOME FUND, INC. Transferable on the books of the Corporation in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented thereby are issued and shall be held subject to all the provisions of the Articles of Incorporation and By-Laws of the Corporation as from time to time amended (copies of which are on file at the offices of the Corporation), to all of which the holder by acceptance hereof assents. This certificate is not valid unless countersigned and registered by a Transfer Agent and Registrar. Witness the facsimile signatures of its duly authorized officers. Dated: /s/ Stephanie Kelley /s/ Stephen C. Miller Secretary Chairman of the Board COUNTERSIGNED AND REGISTERED MELLON INVESTOR SERVICES LLC TRANSFER AGENT AND REGISTRAR BY AUTHORIZED SIGNATURE BOULDER GROWTH & INCOME FUND, INC. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties under Uniform Gifts to Minors Act __________ (state) JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT - _______ Custodian ___________ (Cust) (Minor) Additional abbreviations may also beused though not on the above list. For value received, _________________________________ hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ____________________________________ - -------------------------------------------------------------------------------- Please print or typewrite name and address including postal zip code of assignee _________________ shares of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint ______________________________________ Attorney to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises. Dated: - ---------------------------- NOTICE: The signature to this assignment must correspond with the name as written on the face of the Certificate, in every particular, without alteration or enlargement, or any change whatever. Signature(s) Guaranteed: The signatures should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loans associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15. EX-99.2D 12 ex2-dii.txt EXHIBIT 2(D)(II) EXHIBIT (d)(ii) NOTICE OF INTENT NOTICE OF INTENT To the Holders of Boulder Growth & Income Fund, Inc. Common Stock NOTICE IS HEREBY GIVEN that, subject to the terms and conditions set forth in this Notice of Intent, Boulder Growth & Income Fund, Inc. (the "Fund") intends to make a rights offering, pursuant to which it will distribute to its holders of common stock one transferable subscription right to purchase one share of common stock for each share of common stock held by them on the record date for the rights offering. Since the New York Stock Exchange requires that the Fund advise its holders of common stock at least ten days prior to the record date of the rights offering, this notice describes the principal terms of the offer, which have been previously disseminated via press release. The Fund has filed with the Securities and Exchange Commission ("SEC") a registration statement with respect to the rights offering and will deliver to holders of its common stock the prospectus included as part of the registration statement. The rights offering and this notice of intent are contingent upon the registration statement being declared effective by the SEC. Terms Of The Offer 1. Basic Subscription Privilege. Each right will entitle the holder to a basic subscription privilege and an oversubscription privilege. Under the basic subscription privilege, each whole right will entitle the holder to purchase one share of the Fund's common stock at a per share subscription price (as set forth below). 2. Oversubscription Privilege. Under the oversubscription privilege, a record date rightsholder who exercises the basic subscription privilege in full will have the right to subscribe, at the same subscription price, for up to that number of shares of the Fund's common stock which are not purchased by other rightsholders under their basic subscription privilege. If a holder of rights delivers an oversubscription request for shares of the Fund's common stock and the Fund has received oversubscription requests for more shares of its common stock than are available for oversubscription, the rightsholder will receive the lesser of (1) his or her pro rata portion of the available shares based on the number of shares he or she purchased under the basic subscription privilege or (2) the number of shares for which he or she oversubscribed. 3. Subscription Price. The subscription price per share will be equal to 95% of the lesser of (a) the net asset value per share on the Pricing Date (as that term is defined in the registration statement) or (b) the average volume-weighted sales price of the Fund's shares on the New York Stock Exchange on the Pricing Date and the four preceding trading days. 4. Timetable. It is anticipated that the record date for the rights offering will be on or about November 29, 2002 (subject to the registration statement being declared effective by the SEC). The subscription period will be approximately 21 calendar days following the record date. It is expected that certificates evidencing the right to subscribe together with the prospectus will be mailed to record date shareholders within three days following the record date. PLEASE NOTE that the commencement of the offering, the record date and the subscription price will be announced through the prospectus and the public media. Shareholders should be alert to these subsequent announcements. Dated: November 7, 2002 - -------------------------------------------------------------------------------- SHAREHOLDER INQUIRIES SHOULD BE DIRECTED TO GEORGESON SHAREHOLDER COMMUNICATIONS INC., THE INFORMATION AGENT, AT (800) 732-6518 - -------------------------------------------------------------------------------- A registration statement relating to the rights and the underlying shares of the Fund's common stock has been filed with the SEC but has not yet become effective. No rights and no shares of the Fund's common stock underlying the rights will be sold or distributed nor may offers to buy any of these securities be accepted prior to the time the registration statement becomes effective. This notice of intent shall not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of the rights or the underlying shares of the Fund's common stock in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. EX-99.2D 13 ex2-diii.txt EXHIBIT 2(D)(III) EXHIBIT (d)(iii) SUBSCRIPTION CERTIFICATE VOID IF NOT RECEIVED BY THE SUBSCRIPTION AGENT BEFORE 5:00 P.M. EASTERN TIME ON THE EXPIRATION DATE BOULDER GROWTH & INCOME FUND, INC. SUBSCRIPTION RIGHTS FOR COMMON STOCK Dear Shareholder: IN ORDER TO EXERCISE YOUR RIGHTS, YOU MUST COMPLETE BOTH SIDES OF THIS CARD AND RETURN TO THE SUBSCRIPTION AGENT. As the registered owner of the Subscription Certificate below, you are entitled to subscribe for the number of shares of Common Stock, $.01 par value per share, of Boulder Growth & Income Fund, Inc. (the "Fund"), shown below pursuant to the Primary Subscription Right and upon the terms and conditions and at the Subscription Price for each share of Common Stock specified in the Prospectus relating thereto. The Rights represented hereby include the Over-Subscription Privilege for Record Date Shareholders, as described in the Prospectus. Under the Privilege, any number of additional shares may be purchased by a Rights holder if such shares are available and the holder's Primary Subscription Rights have been fully exercised to the extent possible. Registered owners will be automatically issued stock certificates. Stock certificates for primary share subscriptions will be delivered as soon as practicable after receipt of the required completed Subscription Certificate and after full payment has been received and cleared. Stock certificates for oversubscriptions and confirmation statements reflecting uncertificated share credits for dividend reinvestment accounts will be delivered as soon as practicable after the Expiration Date (as set forth in the Prospectus) and after all allocations have been effected. THE SUBSCRIPTION RIGHTS ARE TRANSFERABLE. Payment must be in United States dollars. Only money orders or checks drawn on a bank located in the continental United States and made payable to Boulder Growth & Income Fund, Inc. will be accepted. Please reference your rights card control number on your check, money order or notice of guaranteed delivery. - -------------------------------------------------------------------------------- VOID IF NOT RECEIVED BY THE SUBSCRIPTION AGENT BEFORE 5:00 P.M. EASTERN TIME ON THE EXPIRATION DATE Control No. Rights Represented by this Subscription Certificate: CUSIP No. BOULDER GROWTH & INCOME FUND, INC. RIGHTS FOR COMMON STOCK (Complete appropriate section on reverse side of this form) The registered owner of this Subscription Certificate named below, or assigns, is entitled to the number of Rights to subscribe for the Common Stock, $.01 par value, of Boulder Growth & Income Fund, Inc. (the "Fund") shown above, in the ratio of one share of Common Stock for each one Right, pursuant to the Primary Subscription Right and upon the terms and conditions and at the price for each share of Common Stock specified in the Prospectus relating thereto. The Rights represented hereby include the Over-Subscription Privilege for Record Date Stockholders only, as described in the Prospectus. Under this Privilege, any number of additional shares may be purchased by a Record Date Stockholder if such shares are available and the owner's Primary Subscription Rights have been fully exercised to the extent possible and the pro rata allocation requirements have been satisfied. Stock certificates for the shares subscribed for pursuant to the Primary Subscription Right will be delivered as soon as practicable after receipt of the required completed Subscription Certificate and after full payment has been received and cleared. Stock certificates for the shares subscribed for pursuant to the Over-Subscription Privilege will be delivered as soon as practicable after the Expiration Date and after all allocations have been effected. Any refund in connection with an over-subscription will be delivered as soon as practicable after the Expiration Date and after all allocations have been effected. The Subscription Certificate may be transferred in the same manner and with the same effect as in the case of a negotiable instrument payable to specific persons, by duly completing and signing the assignment on the reverse side hereof. To subscribe pursuant to the Primary Subscription Right or the Over-Subscription Privilege, one Right and the Subscription Price are required for each share of Common Stock. Payment of $5.09 per share must accompany the Subscription Certificate. See reverse side of form. To subscribe for your primary shares please complete line "A" on the card below. Example: 100 shares = 100 rights 100 rights divided by 1 = 100 primary shares 100 x $5.09 = $509.00 (No. of shares) If you are not subscribing for your full Primary Subscription, check box "D" below and we will attempt to sell any remaining unexercised Rights. To subscribe for any over-subscription shares please complete line "B" below. Please Note: Only Record Date Stockholders who have exercised their Primary Subscription in full may apply for shares pursuant to the Over-Subscription Privilege. Payment of Shares: Full payment for both the primary and over-subscription shares or a notice of guaranteed delivery must accompany this subscription. Please reference your rights card control number on your check, money order or notice of guaranteed delivery. If the aggregate Subscription Price paid by a Record Date Stockholder is insufficient to purchase the number of shares of Common Stock that the holder indicates are being subscribed for, or if a Record Date Stockholder does not specify the number of shares of Common Stock to be purchased, then the Record Date Stockholder will be deemed to have exercised first, the Primary Subscription Right (if not already fully exercised) and second, the Over-Subscription Privilege to purchase shares of Common Stock to the full extent of the payment rendered. If the aggregate Subscription Price paid by a Record Date Stockholder exceeds the amount necessary to purchase the number of shares of Common Stock for which the Record Date Stockholder has subscribed, then the Record Date Stockholder will be deemed to have exercised first, the Primary Subscription Right (if not already fully exercised) and second, the Over-Subscription Privilege to the full extent of the excess payment tendered. - -------------------------------------------------------------------------------- THIS CERTIFICATE IS VOID UNLESS RECEIVED BY THE SUBSCRIPTION AGENT BEFORE 5:00 PM, EASTERN TIME ON THE EXPIRATION DATE (DECEMBER 20, 2002) (UNLESS EXTENDED) AT ONE OF THE FOLLOWING ADDRESSES: BY MAIL BY HAND DELIVERY: BY OVERNIGHT COURIER: Colbent Corporation Securities Transfer & Colbent Corporation Attention: Reporting Services, Inc. Attention: Corporate Corporate Actions c/o Colbent Corporation Actions P.O. Box 859208 100 William Street, 40 Campanelli Drive Braintree, Galleria Braintree, Massachusetts Massachusetts New York, New York 10038 02184 02185-9208 - -------------------------------------------------------------------------------- PLEASE FILL IN ALL APPLICABLE INFORMATION - -------------------------------------------------------------------------------- A. Primary Subscription _____________ x ______________* = $ _____________ (1 Right = 1 share) (No .of Shares) (Purchase Price) B. Over-Subscription Privilege ___________ x ____________* = $ _______(1) (No. of Shares) (Purchase Price) C. Amount of Check Enclosed (or amount in notice of guaranteed delivery) = $____________ D. Sell any Remaining Rights [_] E. Sell all of my Rights [_] (1) The Over-Subscription Privilege can be exercised only by a Record Date Shareholder, as described in the Prospectus, and only if the Rights initially issued to him are exercised to the fullest extent possible. * $5.09 is the "estimated" Subscription Price. The actual Subscription Price determined on the Expiration Date may be higher or lower. It is possible that shareholders will receive a refund or be required to pay additional amounts equal to the difference between the estimated Subscription Price and the actual Subscription Price. SECTION 1. TO SUBSCRIBE: I hereby irrevocably subscribe for the face amount of Common Stock indicated as the total of A and B hereon upon the terms and conditions specified in the Prospectus relating thereto, receipt of which is acknowledged. I hereby agree that if I fail to pay for the shares of Common Stock for which I have subscribed, the Fund may exercise any of the remedies set forth in the Prospectus. TO SELL: If I have checked the box on either line D or on line E, I authorize the sale of Rights by the Subscription Agent according to the procedures described in the Prospectus. - -------------------------------------------------------------------------------- Signature(s) of Subscriber(s) - -------------------------------------------------------------------------------- Address for delivery of Shares if other than shown on front If permanent change of address, check here [_] Please give your telephone number ( ) - -------------------------------------------------------------------------------- Please give your email address: - -------------------------------------------------------------------------------- SECTION 2. TO TRANSFER RIGHTS (except pursuant to D or E above): For value received, _________ of the Rights represented by the Subscription Certificate are assigned to: - -------------------------------------------------------------------------------- (Print full name of Assignee) - -------------------------------------------------------------------------------- (Print full address) - -------------------------------------------------------------------------------- (Signature of Assignee) IMPORTANT: The Signature must be guaranteed by: (a) a commercial bank or trust company; (b) a member firm of a domestic stock exchange; or (c) a savings bank or credit union. Signature (name of bank of firm): - -------------------------------------------------------------------------------- Guaranteed By (signature/title): - -------------------------------------------------------------------------------- EX-99.2D 14 ex2-div.txt EXHIBIT 2(D)(IV) EXHIBIT (d)(iv) BROKER SPLIT REQUEST BOULDER GROWTH & INCOME FUND, INC. SUBSCRIPTION RIGHTS BROKER SPLIT REQUESTS Colbent Corporation Attn: Corporate Actions P.O. Box 859208 Braintree, Massachusetts 02185-9208 Telephone: (781) 843-1833 Ext. 203 Facsimile: (781) 380-3388 Confirm: (781) 575-4816 If you require that your Rights certificate be issued in various denominations, please indicate your request for breakdown below and return this form to us, either by facsimile at the above number or by mail at the above address. *Total Share Position __________________________________ (this will be verified on the Record Date) No. of Cards to be issued x No. of Rights Total Cards ____________ Total Rights ____________ Please advise us where to forward the Rights certificates, by completing the following information: Contact Name: ------------------------------------------ Address: --------------------------------------------- --------------------------------------------- --------------------------------------------- Telephone Number: -------------------------------------- *Please note: this number should not include any shares which are held by you through DTC. EX-99.2D 15 ex2-dv.txt EXHIBIT 2(D)(V) EXHIBIT (d)(v) BENEFICIAL OWNER CERTIFICATION BOULDER GROWTH & INCOME FUND, INC. BENEFICIAL OWNER CERTIFICATION The undersigned, a bank, broker or other nominee holder of Rights to purchase shares of Common Stock of the Boulder Growth & Income Fund, Inc. (the "Fund") pursuant to the rights offer (the "Offer") described and provided for in the Fund's Prospectus dated __________, 2002 (the "Prospectus") hereby certifies to the Fund and to Colbent Corporation, as Subscription Agent for the Offer, that for each numbered line filled in below the undersigned has purchased, on behalf of the beneficial owner thereof (which may be the undersigned), the number of shares of Common Stock specified on such line pursuant to the Primary Subscription (as defined in the Prospectus) and such beneficial owner wishes to subscribe for the purchase of additional shares of Common Stock pursuant to the Over-Subscription Privilege (as defined in the Prospectus), in the amount set forth in the third column of such line: - -------------------------------------------------------------------------------- I II III - -------------------------------------------------------------------------------- Number of Shares Number of Shares Requested Pursuant to Purchased Pursuant to Over-Subscription Record Date Shares Primary Subscription Privilege - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Total = Total = Total = - -------------------------------------------------------------------------------- - ------------------------------------------------ Name of Nominee Holder By: -------------------------------------------- Name: Title: Date: , 2002 -------------- Provide the following information if applicable: - ------------------------------------------------ Depository Trust Company ("DTC") Participant Number - ------------------------------------------------ DTC Basic Subscription Confirmation Number Contact: --------------------------------------- Phone Number: ---------------------------------- EX-99.2D 16 ex2-dvi.txt EXHIBIT 2(D)(VI) EXHIBIT (d)(vi) NOMINEE OVER-SUBSCRIPTION BOULDER GROWTH & INCOME FUND, INC. RIGHTS FOR COMMON STOCK NOMINEE HOLDER OVER-SUBSCRIPTION CERTIFICATION PLEASE COMPLETE ALL APPLICABLE INFORMATION BY FIRST CLASS MAIL: BY OVERNIGHT COURIER: BY HAND: Colbent Corporation. Colbent Corporation Transfer and Reporting Attn: Corporate Actions Attn: Corporate Services Inc. P.O. Box 859208 Actions C/o Colbent Braintree, Massachusetts 02185- 40 Campanelli Drive Corporation 9208 Braintree, 100 Williams Street Massachusetts 02184 Galleria New York, NY 10038 THIS FORM IS TO BE USED ONLY BY NOMINEE HOLDERS TO EXERCISE THE OVER-SUBSCRIPTION PRIVILEGE IN RESPECT OF RIGHTS WITH RESPECT TO WHICH THE PRIMARY SUBSCRIPTION PRIVILEGE WAS EXERCISED IN FULL AND DELIVERED THROUGH THE FACILITIES OF A COMMON DEPOSITORY. ALL OTHER EXERCISES OF OVER-SUBSCRIPTION PRIVILEGES MUST BE EFFECTED BY THE DELIVERY OF THE SUBSCRIPTION CERTIFICATES. THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE FUND'S PROSPECTUS DATED ___________, 2002 (THE "PROSPECTUS") AND ARE INCORPORATED HEREIN BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM THE SUBSCRIPTION AGENT. THIS CERTIFICATION IS VOID UNLESS RECEIVED BY THE SUBSCRIPTION AGENT WITH PAYMENT IN FULL OR WITH A PROPERLY COMPLETED NOTICE OF GUARANTEED DELIVERY BEFORE 5:00 P.M., NEW YORK CITY TIME ON DECEMBER 20, 2002, UNLESS EXTENDED BY THE FUND (THE "EXPIRATION DATE"). 1. The undersigned hereby certifies to the Subscription Agent that it is a participant in ______________________ (Name of Depository) (the "Depository") and that it has either (i) exercised the Primary Subscription in respect of the Rights and delivered such exercised Rights to the Subscription Agent by means of transfer to the Depository Account of the Subscription Agent or (ii) delivered to the Subscription Agent a Notice of Guaranteed Delivery in respect of the exercise of the Primary Subscription Privilege and will deliver the Rights called for in such Notice of Guaranteed Delivery to the Subscription Agent by means of transfer to such Depository Account of Subscription Agent. 2. The undersigned hereby exercises the Over-Subscription Privilege to purchase, to the extent available, _____________ shares of Common Stock and certifies to the Subscription Agent that such Over-Subscription Privilege is being exercised for the account or accounts of persons (which may include the undersigned) on whose behalf all Primary Subscription Rights have been exercised.* 3. The undersigned understands that payment of the estimated Subscription Price of $5.09 per share for each share of Common Stock subscribed for pursuant to the Over-Subscription Privilege must be received by the Subscription Agent before 5:00 P.M., Eastern time, on the Expiration Date, unless a Notice of Guaranteed Delivery is used, in which case, payment in full must be received by the Subscription Agent no later than the close of business on the third business day after the Expiration Date and represents that such payment, in the aggregate amount of $_______, either (check Appropriate box): [_] has been or is being delivered to the Subscription Agent pursuant to the Notice of Guaranteed Delivery referred to above; or [_] is being delivered to the Subscription Agent herewith; or [_] has been delivered separately to the Subscription Agent. In the case of funds not delivered pursuant to a Notice of Guaranteed Delivery, the undersigned represents that payment is or was delivered in the manner set forth below (check appropriate box and complete information relating thereto): [_] uncertified check [_] certified check [_] bank draft (Continued on the other side) - ------------------------------------------------ Primary Subscription Confirmation Number - ------------------------------------------------ Depository Participant Number - ------------------------------------------------ Contact Name - ------------------------------------------------ Phone Number: - ------------------------------------------------ Name of Nominee Holder Address: --------------------------------------- ---------------------------------------- ---------------------------------------- City State Zip By: -------------------------------------------- Name: ------------------------------------------ Title: ----------------------------------------- Dated: , 2002 ---------- *PLEASE ATTACH A BENEFICIAL OWNER LISTING CONTAINING THE RECORD DATE POSITION OF RIGHTS OWNED, THE NUMBER OF PRIMARY SHARES SUBSCRIBED AND THE NUMBER OF OVER-SUBSCRIPTION SHARES, IF APPLICABLE, REQUESTED BY EACH SUCH OWNER. EX-99.2D 17 ex2-dvii.txt EXHIBIT 2(D)(VII) EXHIBIT (d)(vii) DTC 0VER-SUBSCRIPTION BOULDER GROWTH & INCOME FUND, INC. RIGHTS FOR COMMON STOCK DTC PARTICIPANT OVER-SUBSCRIPTION EXERCISE FORM THIS FORM IS TO BE USED ONLY BY DEPOSITORY TRUST COMPANY PARTICIPANTS TO EXERCISE THE OVER-SUBSCRIPTION PRIVILEGE IN RESPECT OF RIGHTS WITH RESPECT TO WHICH THE PRIMARY SUBSCRIPTION PRIVILEGE WAS EXERCISED IN FULL AND DELIVERED THROUGH THE FACILITIES OF THE DEPOSITORY TRUST COMPANY. ALL OTHER EXERCISES OF OVER-SUBSCRIPTION PRIVILEGES MUST BE EFFECTED BY THE DELIVERY OF THE SUBSCRIPTION CERTIFICATES. THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE FUND'S PROSPECTUS DATED ___________, 2002 (THE "PROSPECTUS") AND ARE INCORPORATED HEREIN BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM THE SUBSCRIPTION AGENT BY CALLING 1-800-732-6518. VOID UNLESS RECEIVED BY THE SUBSCRIPTION AGENT BEFORE 5:00 P.M., EASTERN TIME ON DECEMBER 20, 2002, UNLESS EXTENDED BY THE FUND (THE "EXPIRATION DATE"). 1. The undersigned hereby certifies to the Fund and the Subscription Agent that it is a participant in The Depository Trust Company ("DTC") and that it has either (i) fully exercised its Rights under the Primary Subscription and delivered such exercised Rights to the Subscription Agent by means of transfer to the DTC Account of the Subscription Agent or (ii) delivered to the Subscription Agent a Notice of Guaranteed Delivery in respect of the exercise of the Primary Subscription Privilege and will deliver the Rights called for in such Notice of Guaranteed Delivery to the Subscription Agent by means of transfer to such DTC Account of Subscription Agent. 2. The undersigned hereby exercises the Over-Subscription Privilege to purchase, to the extent available, _____________ shares of Common Stock and certifies to the Fund and the Subscription Agent that such Over-Subscription Privilege is being exercised for the account or accounts of persons (which may include the undersigned) on whose behalf all Primary Subscription Rights have been exercised. 3. The undersigned understands that payment of the estimated Subscription Price of $5.09 per share for each share of Common Stock subscribed for pursuant to the Over-Subscription Privilege must be received by the Subscription Agent before 5:00 P.M., Eastern time, on the Expiration Date, and represents that such payment, in the aggregate amount of $_______, either (check Appropriate box): [_] has been or is being delivered to the Subscription Agent pursuant to the Notice of Guaranteed Delivery referred to above; or [_] is being delivered to the Subscription Agent herewith; or [_] has been delivered separately to the Subscription Agent. In the case of funds not delivered pursuant to a Notice of Guaranteed Delivery, the undersigned represents that payment is or was delivered in the manner set forth below (check appropriate box and complete information relating thereto): [_] uncertified check [_] certified check [_] bank draft (Continued on the other side) - ------------------------------------------------ Primary Subscription Confirmation Number - ------------------------------------------------ DTC Participant Number - ------------------------------------------------ Name of DTC Participant For allocation purposes, the total number of record date shares owned by the persons on whose behalf this Over-Subscription Privilege is being exercised were __________________. Registration into which shares, interest and/or refund checks should be issued: Name: ------------------------------------------ ------------------------------------------ Address: --------------------------------------- --------------------------------------- --------------------------------------- Certified TIN: --------------------------------- By: -------------------------------------------- Name: Title: Contact Name: ---------------------------------- Phone Number: ---------------------------------- Dated: , 2002 ------------------ EX-99.2D 18 ex2-dviii.txt EXHIBIT 2(D)(VIII) EXHIBIT (d)(viii) NOTICE OF GUARANTEED DELIVERY NOTICE OF GUARANTEED DELIVERY For Shares of Common Stock of BOULDER GROWTH & INCOME FUND, INC. Subscribed for under Primary Subscription And Over-Subscription Privilege As set forth in the Prospectus, this form or one substantially equivalent hereto may be used as a means of effecting subscription and payment for all shares of the Fund's Common Stock (the "Shares") subscribed for under the Primary Subscription and the Over-Subscription Privilege. Such form may be delivered by hand or sent by facsimile transmission, overnight courier or first class mail to the Subscription Agent: The Subscription Agent is: Colbent Corporation Attn: Corporate Actions 40 Campanelli Drive Braintree, Massachusetts 02184 Confirm by Telephone to: (781) 575-4816 BY MAIL: BY OVERNIGHT COURIER: Colbent Corporation Colbent Corporation Attn: Corporate Actions Attn: Corporate Actions P.O. Box 859208 40 Campanelli Drive Braintree, Massachusetts 01285-9208 Braintree, Massachusetts 02184 BY HAND DELIVERY: BY FACSIMILE: Securities Transfer & Reporting Services, Inc. (781) 380-3388 c/o Colbent Corporation Confirm by telephone 100 William Street, Galleria to (781) 575-4816 New York, New York 10038 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTION VIA A TELECOPY FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY. The New York Stock Exchange member firm, bank or trust company which completes this form must communicate this guarantee and the number of Shares subscribed for in connection with this guarantee (separately disclosed as to the Primary Subscription and the Over-Subscription Privilege) to the Subscription Agent and must deliver this Notice of Guaranteed Delivery, guaranteeing delivery of (a) payment in full for all subscribed Shares and (b) a properly completed and signed copy of the Subscription Certificate (which certificate and full payment must then be delivered no later than the close of business on the third business day after the Expiration Date, unless extended) to the Subscription Agent prior to 5:00 P.M., New York time, on the Expiration Date, unless extended. Failure to do so will result in a forfeiture of the Rights. GUARANTEE The undersigned, a member firm of the New York Stock Exchange or a bank or trust company having an office or correspondent in the United States, guarantees delivery to the Subscription Agent by no later than 5:00 P.M. Eastern time, on December 26, 2002 (unless extended as described in the Prospectus) of (a) a properly completed and executed Subscription Certificate and (b) delivery of payment in full of the Subscription Price for Shares (determined in accordance with the formula set forth in the Prospectus) subscribed for on Primary Subscription and for any additional Shares subscribed for pursuant to the Over-Subscription Privilege, as subscription for such Shares is indicated herein or in the Subscription Certificate. (continued on other side) Broker Assigned Control No. ---------------------- THE BOULDER GROWTH & INCOME FUND, INC. 1. PRIMARY SUBSCRIPTION Number of Rights to be Number of Primary Shares Payment to be made in connection exercised requested for which you are with Primary Shares guaranteeing delivery of Rights and Payment ____________ Rights ____________ Shares $________________ 2. OVER-SUBSCRIPTION Number of Over-Subscription Payment to be made in connection Shares requested for which with Over-Subscription Shares you are guaranteeing payment ____________ Shares $_________________ 3. TOTALS Total Number of Rights to be Delivered ___________ Rights $________________ Total Payment
Method of delivery (circle one) A. Through DTC B. Direct to Colbent Corporation, as Subscription Agent. Please reference below the registration of the Rights to be delivered. ---------------------------- ---------------------------- ---------------------------- Please assign a unique control number for each guarantee submitted. This number needs to be referenced on any direct delivery of Rights or any delivery through DTC. In addition, please note that if you are guaranteeing for Over-Subscription Privilege Shares and are a DTC participant, you must also execute and forward to Colbent Corporation a DTC Participant Over-Subscription Exercise Form. - -------------------------------------- -------------------------------------- Name of Firm Authorized Signature - -------------------------------------- -------------------------------------- DTC Participant Number Title - -------------------------------------- -------------------------------------- Address Name (Please print or type) - -------------------------------------- -------------------------------------- Zip Code Phone Number - -------------------------------------- ------------------------------------- Contact Name Date EX-99.2G 19 ex2-gi.txt EXHIBIT 2(G)(I) EXHIBIT (g)(i) INVESTMENT ADVISORY AGREEMENT (BIA) INVESTMENT ADVISORY AGREEMENT THIS INVESTMENT ADVISORY AGREEMENT (this "Agreement") is made as of the 26th of April, 2002, by and among BOULDER INVESTMENT ADVISERS, L.L.C., a Colorado limited liability company (the "Adviser") and BOULDER GROWTH & INCOME FUND, INC., a Maryland corporation (the "Fund"). 1. Investment Description; Appointment. The Fund desires to employ its capital by investing and reinvesting in investments of the kind and in such manner and to such extent as may from time to time be approved by the Board of Directors of the Fund (the "Board"). The Fund desires to employ and hereby appoints the Adviser to act as investment adviser to the Fund. Adviser hereby accepts the appointment and agrees to furnish the services described herein for the compensation set forth below. 2. Services as Investment Adviser. Subject to the supervision and direction of the Board, the Adviser will (a) act in accordance with the Investment Company Act of 1940 (the "1940 Act") and the Investment Advisers Act of 1940, as the same may be from time to time amended, (b) manage the Fund's portfolio on a discretionary basis in accordance with its investment objectives and policies, (c) make investment decisions and exercise voting rights in respect of portfolio securities for the Fund, (d) place purchase and sale orders on behalf of the Fund, (e) employ, at its own expense, professional portfolio managers and securities analysts to provide research services to the Fund, (f) determine the portion of the Fund's assets to be invested, from time to time, in various asset classes (e.g., common stocks, fixed income securities, cash equivalents), (g) determine the portion of the Fund's assets to be leveraged, from time to time, and the form that such leverage will take, and (h) monitor and evaluate the services provided by the Fund's investment sub-adviser(s), if any, under the terms of the applicable investment sub-advisory agreement(s). In providing these services, the Adviser will provide investment research and supervision of the Fund's evaluation and, if appropriate, sale and reinvestment of the Fund's assets. In addition, the Adviser will furnish the Fund with whatever statistical information the Fund may reasonably request with respect to the securities that the Fund may hold or contemplate purchasing. 3. Co-Advisor to the Fund. Subject to the approval of the Board and where required, the Fund's shareholders, the Fund will engage an investment co-adviser, Stewart Investment Advisers, a Barbados international business company and registered investment adviser under the Investment Advisers Act of 1940, in respect of all or a portion of the Fund's assets (the "Co-Adviser"). The Adviser and the Co-Adviser will be jointly responsible for providing the services described in subparagraphs (b), (c), (d), (e), (f) and (g) in Paragraph 2 above and Paragraphs 5 and 6 below (Information Provided to Fund) with respect to the Fund's assets, although the Adviser will have primary responsibility for all record-keeping and day-to-day business activities relating to the investment operations of the Fund. In the event that the Co-Adviser's engagement is terminated, the Adviser shall be responsible for furnishing the Fund with the services theretofore performed by such Co-Adviser under the applicable investment advisory agreement or arranging for a successor co-adviser or sub-adviser, as the case may be, to provide such services under terms and conditions acceptable to the Fund and the Board and subject to the requirements of the 1940 Act. 4. Engagement of Sub-Advisers to the Fund. Subject to the approval of the Board and where required, the Fund's shareholders, the Adviser may engage an investment sub-adviser or sub-advisers to provide advisory services in respect of all or a portion of the Fund's assets (the "Sub-Advised Portion") and may delegate to such investment sub-adviser(s) all or a portion of the responsibilities described in subparagraphs (b), (c), (d), (e), (f) and (g) in Paragraph 2 above and Paragraph 6 below (Information Provided to Fund) with respect to the Sub-Advised Portion. In the event that an investment sub-adviser's engagement has been terminated, the Adviser shall be responsible for furnishing the Fund with the services required to be performed by such investment sub-adviser(s) under the applicable investment sub-advisory agreements or arranging for a successor co-adviser or sub-adviser, as the case may be, to provide such services under terms and conditions acceptable to the Fund and the Board and subject to the requirements of the 1940 Act. 5. Brokerage. In executing transactions for the Fund and selecting brokers or dealers, the Adviser will use its best efforts to seek the best overall terms available. In assessing the best overall terms available for any Fund transaction, the Adviser will consider all factors it deems relevant including, but not limited to, breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer and the reasonableness of any commission for the specific transaction and on a continuing basis. In selecting brokers or dealers to execute any transaction and in evaluating the best overall terms available, the Adviser may consider the brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the Fund and/or other accounts over which the Adviser or any affiliate exercises investment discretion. 6. Information Provided to the Fund. The Adviser will use its best efforts to keep the Fund informed of developments materially affecting the Fund, and will, on its own initiative, furnish the Fund from time to time with whatever information the Adviser believes is appropriate for this purpose. 7. Standard of Care. The Adviser shall exercise its best judgment in rendering the services described herein. The Adviser shall not be liable for any error of judgment or mistake of law or omission or any loss suffered by the Fund in connection with the matters to which this Agreement relates, provided that nothing herein shall be deemed to protect or purport to protect the Adviser against any liability to the Fund to which the Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement ("Disabling Conduct"). The Fund will indemnify the Adviser against, and hold it harmless from, any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses), including any amounts paid in satisfaction of judgments, in compromise or as fines or penalties, not resulting from Disabling Conduct by the Adviser. Indemnification shall be made only following (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the Adviser was not liable by reason of Disabling Conduct, or (ii) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the Adviser was not liable by reason of Disabling Conduct by (a) the vote of a majority of the Directors of the Fund who are neither "interested persons" of the Fund nor parties to the proceeding ("disinterested non-party Directors"), or (b) independent legal counsel in a written opinion. The Adviser shall be entitled to advances from the Fund for payment of the reasonable expenses incurred by it in connection with the matter to which it is seeking indemnification in the manner and to the fullest extent permissible under the law. The Adviser shall provide to the Fund a written affirmation of its good faith belief that the standard of conduct necessary for indemnification by the Fund has been met and a written undertaking to repay any such advance if it should ultimately be determined that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (a) the Adviser shall provide a security in form and amount acceptable to the Fund for its undertaking; (b) the Fund is insured against losses arising by reason of the advance; or (c) a majority of disinterested non-party Directors, or independent legal counsel, in a written opinion, shall have determined, based on a review of facts readily available to the Fund at the time the advance is proposed to be made, that there is reason to believe that the Adviser will ultimately be found to be entitled to indemnification. 8. Compensation. In consideration of the services rendered pursuant to this Agreement, the Fund will pay the Adviser the Advisory Fee (as defined in the Fee Schedule) such amount to be paid monthly, in the amount set forth in the fee schedule attached hereto as Exhibit A (the "Fee Schedule"). The Advisory Fee shall be the aggregate and entirety of all advisory fees to be paid by the Fund and will be divided between the Adviser and the Co-Adviser as set forth in the Fee Schedule, which fee split may be adjusted from time to time in the discretion of the Board so long as the aggregate advisory fee does not exceed the Advisory Fee. The fee payable to Adviser for any period shorter than a full calendar month shall be prorated according to the proportion that such payment bears to the full monthly payment. 9. Expenses. Except as indicated below, the Adviser will bear all expenses in connection with the performance of its services under this Agreement, including the fees payable to the Co-Adviser and to any investment sub-adviser engaged pursuant to Paragraphs 3 or 4 of this Agreement. The Fund will bear certain other expenses to be incurred in its operation, including organizational expenses, taxes, interest, brokerage costs and commissions and stock exchange fees; fees of Directors of the Fund who are not also officers, directors or the employees of Adviser; Securities and Exchange Commission fees; state Blue Sky qualification fees; charges of any custodian, any sub-custodians and transfer and dividend-paying agents; insurance premiums; outside auditing and legal expenses; costs of maintenance of the Fund's existence; membership fees in trade associations; stock exchange listing fees and expenses; litigation and other extraordinary or non-recurring expenses. Additionally, the Fund will bear the reasonable travel-related expenses (or an appropriate portion thereof) to attend Board of Directors' meetings for (i) the Fund's executive officers who are also officers of the Adviser or the Co-Adviser and (ii) the Adviser's, Co-Adviser's or a sub-adviser's portfolio manager(s) who are primarily responsible for managing the Fund's portfolio. 10. Services to other Companies or Accounts. The Fund understands that the Adviser now acts, or may act in the future as an investment adviser to fiduciary and other managed accounts or other trusts, or as investment adviser to one or more other registered or unregistered investment companies, and the Fund has no objection to the Adviser so acting. The Fund understands that the persons employed by Adviser to assist in the performance of the Adviser's duties hereunder will not devote their full time to such service and nothing contained herein shall be deemed to limit or restrict the right of the Adviser or any affiliate of the Adviser to engage in and devote time and attention to other businesses or to render services of whatever kind or nature. 11. Term of Agreement. This Agreement shall become effective as of the date it is approved by a vote of a "majority" (as defined in the 1940 Act) of the Fund's outstanding voting securities (the "Effective Date") and shall continue for an initial two-year term and shall remain in effect from year to year so long as such continuance is specifically approved by (a) a majority of the Directors who are not "interested persons" of the Fund (as defined in the 1940 Act) and a majority of the full Board or (b) a majority of the outstanding voting securities of the Fund (as defined in the 1940 Act). This Agreement is terminable by a party hereto on sixty (60) days' written notice to the other party. Any termination shall be without penalty and any notice of termination shall be deemed given when received by the addressee. 12. No Assignment. This Agreement may not be transferred, assigned, sold or in any manner hypothecated or pledged by any party hereto and will terminate automatically in the event of its assignment (as defined in the 1940 Act). It may be amended by mutual agreement, in writing, by the parties hereto. 13. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto. 14. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Colorado. 15. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original for all purposes, and together shall constitute one and the same Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. ADVISER: FUND: BOULDER INVESTMENT ADVISERS, BOULDER GROWTH & INCOME FUND, LLC, a Colorado limited liability company INC., a Maryland corporation /s/ Carl D. Johns /s/ Stephen C. Miller By: Carl D. Johns By: Stephen C. Miller Its: Assistant Manager Its: President Exhibit A FEE SCHEDULE Adviser shall be paid after the end of each calendar month, a fee for the previous month computed at the annual rate of 1.25% of the value of the Fund's average monthly net assets (the "Advisory Fee"). For purposes of calculating the Advisory Fee, the Fund's average monthly net assets will be deemed to be the average monthly value of the Fund's total assets minus the sum of the Fund's liabilities (excluding leverage borrowings such as bank or institutional borrowings, preferred stock, bonds, debentures, etc.) and accrued dividends. Notwithstanding the foregoing, until such time as more than 50% of the value of the Fund's assets are invested in common stocks, the Advisory Fee shall be computed as follows: (i) 0.04167% of the net asset value of the Fund less net investment income for such month as of the close of business on the last business day of the month (0.50% on an annual basis); plus (ii) 2.5% of the sum of (a) the Fund's dividend and interest income; less (b) interest on borrowed funds during such month. The Advisory Fee is the maximum aggregate fee that is to be paid to the Adviser and any co-Adviser or sub-adviser under this and any other co-advisory or sub-advisory agreements. Fee Split Between Adviser and Co-Adviser The Advisory Fee shall initially be split among the Adviser and Co-Adviser 25% to Boulder Investment Advisers LLC and 75% to Stewart Investment Advisers. EX-99.2G 20 ex2-gii.txt EXHIBIT 2(G)(II) EXHIBIT (g)(ii) INVESTMENT ADVISORY AGREEMENT (SIA) INVESTMENT ADVISORY AGREEMENT THIS INVESTMENT ADVISORY AGREEMENT (this "Agreement") is made as of the 26th day of April, 2002, by and among STEWART INVESTMENT ADVISERS, a Barbados international business company (the "Adviser") and BOULDER GROWTH & INCOME FUND, INC., a Maryland corporation (the "Fund"). 1. Investment Description; Appointment. The Fund desires to employ its capital by investing and reinvesting in investments of the kind and in such manner and to such extent as may from time to time be approved by the Board of Directors of the Fund (the "Board"). The Fund desires to employ and hereby appoints the Adviser to act as investment adviser to the Fund. Adviser hereby accepts the appointment and agrees to furnish the services described herein for the compensation set forth below. 2. Services as Investment Adviser. Subject to the supervision and direction of the Board, the Adviser will (a) act in accordance with the Investment Company Act of 1940 (the "1940 Act") and the Investment Advisers Act of 1940, as the same may be from time to time amended, (b) manage the Fund's portfolio on a discretionary basis in accordance with its investment objectives and policies, (c) make investment decisions and exercise voting rights in respect of portfolio securities for the Fund, (d) place purchase and sale orders on behalf of the Fund, (e) employ, at its own expense, professional portfolio managers and securities analysts to provide research services to the Fund, (f) determine the portion of the Fund's assets to be invested, from time to time, in various asset classes (e.g., common stocks, fixed income securities, cash equivalents), (g) determine the portion of the Fund's assets to be leveraged, from time to time, and the form that such leverage will take, and (h) monitor and evaluate the services provided by the Fund's investment sub-adviser(s), if any, under the terms of the applicable investment sub-advisory agreement(s). In providing these services, the Adviser will provide investment research and supervision of the Fund's evaluation and, if appropriate, sale and reinvestment of the Fund's assets. In addition, the Adviser will furnish the Fund with whatever statistical information the Fund may reasonably request with respect to the securities that the Fund may hold or contemplate purchasing. 3. Co-Advisor to the Fund. Subject to the approval of the Board and where required, the Fund's shareholders, the Fund will engage an investment co-adviser, Boulder Investment Advisers, LLC, a Colorado limited liability company and registered investment adviser under the Investment Advisers Act of 1940, in respect of all or a portion of the Fund's assets (the "Co-Adviser"). The Adviser and the Co-Adviser will be jointly responsible for providing the services described in subparagraphs (b), (c), (d), (e), (f) and (g) in Paragraph 2 above and Paragraphs 5 and 6 below (Information Provided to Fund) with respect to the Fund's assets, although the Adviser will have primary responsibility for all record-keeping and day-to-day business activities relating to the investment operations of the Fund. In the event that the Co-Adviser's engagement is terminated, the Adviser shall be responsible for furnishing the Fund with the services theretofore performed by such Co-Adviser under the applicable investment advisory agreement or arranging for a successor co-adviser or sub-adviser, as the case may be, to provide such services under terms and conditions acceptable to the Fund and the Board and subject to the requirements of the 1940 Act. 4. Engagement of Sub-Advisers to the Fund. Subject to the approval of the Board and where required, the Fund's shareholders, the Adviser may engage an investment sub-adviser or sub-advisers to provide advisory services in respect of all or a portion of the Fund's assets (the "Sub-Advised Portion") and may delegate to such investment sub-adviser(s) all or a portion of the responsibilities described in subparagraphs (b), (c), (d), (e), (f) and (g) in Paragraph 2 above and Paragraph 6 below (Information Provided to Fund) with respect to the Sub-Advised Portion. In the event that an investment sub-adviser's engagement has been terminated, the Adviser shall be responsible for furnishing the Fund with the services required to be performed by such investment sub-adviser(s) under the applicable investment sub-advisory agreements or arranging for a successor co-adviser or sub-adviser, as the case may be, to provide such services under terms and conditions acceptable to the Fund and the Board and subject to the requirements of the 1940 Act. 5. Brokerage. In executing transactions for the Fund and selecting brokers or dealers, the Adviser will use its best efforts to seek the best overall terms available. In assessing the best overall terms available for any Fund transaction, the Adviser will consider all factors it deems relevant including, but not limited to, breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer and the reasonableness of any commission for the specific transaction and on a continuing basis. In selecting brokers or dealers to execute any transaction and in evaluating the best overall terms available, the Adviser may consider the brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the Fund and/or other accounts over which the Adviser or any affiliate exercises investment discretion. 6. Information Provided to the Fund. The Adviser will use its best efforts to keep the Fund informed of developments materially affecting the Fund, and will, on its own initiative, furnish the Fund from time to time with whatever information the Adviser believes is appropriate for this purpose. 7. Standard of Care. The Adviser shall exercise its best judgment in rendering the services described herein. The Adviser shall not be liable for any error of judgment or mistake of law or omission or any loss suffered by the Fund in connection with the matters to which this Agreement relates, provided that nothing herein shall be deemed to protect or purport to protect the Adviser against any liability to the Fund to which the Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement ("Disabling Conduct"). The Fund will indemnify the Adviser against, and hold it harmless from, any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses), including any amounts paid in satisfaction of judgments, in compromise or as fines or penalties, not resulting from Disabling Conduct by the Adviser. Indemnification shall be made only following (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the Adviser was not liable by reason of Disabling Conduct, or (ii) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the Adviser was not liable by reason of Disabling Conduct by (a) the vote of a majority of the Directors of the Fund who are neither "interested persons" of the Fund nor parties to the proceeding ("disinterested non-party Directors"), or (b) independent legal counsel in a written opinion. The Adviser shall be entitled to advances from the Fund for payment of the reasonable expenses incurred by it in connection with the matter to which it is seeking indemnification in the manner and to the fullest extent permissible under the law. The Adviser shall provide to the Fund a written affirmation of its good faith belief that the standard of conduct necessary for indemnification by the Fund has been met and a written undertaking to repay any such advance if it should ultimately be determined that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (a) the Adviser shall provide a security in form and amount acceptable to the Fund for its undertaking; (b) the Fund is insured against losses arising by reason of the advance; or (c) a majority of disinterested non-party Directors, or independent legal counsel, in a written opinion, shall have determined, based on a review of facts readily available to the Fund at the time the advance is proposed to be made, that there is reason to believe that the Adviser will ultimately be found to be entitled to indemnification. 8. Compensation. In consideration of the services rendered pursuant to this Agreement, the Fund will pay the Adviser the Advisory Fee (as defined in the Fee Schedule) such amount to be paid monthly, in the amount set forth in the fee schedule attached hereto as Exhibit A (the "Fee Schedule"). The Advisory Fee shall be the aggregate and entirety of all advisory fees to be paid by the Fund and will be divided between the Adviser and the Co-Adviser as set forth in the Fee Schedule, which fee split may be adjusted from time to time in the discretion of the Board so long as the aggregate advisory fee does not exceed the Advisory Fee. The fee payable to Adviser for any period shorter than a full calendar month shall be prorated according to the proportion that such payment bears to the full monthly payment. 9. Expenses. Except as indicated below, the Adviser will bear all expenses in connection with the performance of its services under this Agreement, including the fees payable to the Co-Adviser and to any investment sub-adviser engaged pursuant to Paragraphs 3 or 4 of this Agreement. The Fund will bear certain other expenses to be incurred in its operation, including organizational expenses, taxes, interest, brokerage costs and commissions and stock exchange fees; fees of Directors of the Fund who are not also officers, directors or the employees of Adviser; Securities and Exchange Commission fees; state Blue Sky qualification fees; charges of any custodian, any sub-custodians and transfer and dividend-paying agents; insurance premiums; outside auditing and legal expenses; costs of maintenance of the Fund's existence; membership fees in trade associations; stock exchange listing fees and expenses; litigation and other extraordinary or non-recurring expenses. Additionally, the Fund will bear the reasonable travel-related expenses (or an appropriate portion thereof) to attend Board of Directors' meetings for (i) the Fund's executive officers who are also officers of the Adviser or the Co-Adviser and (ii) the Adviser's, Co-Adviser's or a sub-adviser's portfolio manager(s) who are primarily responsible for managing the Fund's portfolio. 10. Services to other Companies or Accounts. The Fund understands that the Adviser now acts, or may act in the future as an investment adviser to fiduciary and other managed accounts or other trusts, or as investment adviser to one or more other registered or unregistered investment companies, and the Fund has no objection to the Adviser so acting. The Fund understands that the persons employed by Adviser to assist in the performance of the Adviser's duties hereunder will not devote their full time to such service and nothing contained herein shall be deemed to limit or restrict the right of the Adviser or any affiliate of the Adviser to engage in and devote time and attention to other businesses or to render services of whatever kind or nature. 11. Term of Agreement. This Agreement shall become effective as of the date it is approved by a vote of a "majority" (as defined in the 1940 Act) of the Fund's outstanding voting securities (the "Effective Date") and shall continue for an initial two-year term and shall remain in effect from year to year so long as such continuance is specifically approved by (a) a majority of the Directors who are not "interested persons" of the Fund (as defined in the 1940 Act) and a majority of the full Board or (b) a majority of the outstanding voting securities of the Fund (as defined in the 1940 Act). This Agreement is terminable by a party hereto on sixty (60) days' written notice to the other party. Any termination shall be without penalty and any notice of termination shall be deemed given when received by the addressee. 12. No Assignment. This Agreement may not be transferred, assigned, sold or in any manner hypothecated or pledged by any party hereto and will terminate automatically in the event of its assignment (as defined in the 1940 Act). It may be amended by mutual agreement, in writing, by the parties hereto. 13. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto. 14. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Colorado. 15. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original for all purposes, and together shall constitute one and the same Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. ADVISER: FUND: STEWART INVESTMENT ADVISERS, a BOULDER GROWTH & INCOME FUND, Barbados international business company INC., a Maryland corporation /s/ Glade L. Christensen /s/ Stephen C. Miller By: By: Glade L. Christensen Stephen C. Miller Its: President Its: President Exhibit A FEE SCHEDULE Adviser shall be paid after the end of each calendar month, a fee for the previous month computed at the annual rate of 1.25% of the value of the Fund's average monthly net assets (the "Advisory Fee"). For purposes of calculating the Advisory Fee, the Fund's average monthly net assets will be deemed to be the average monthly value of the Fund's total assets minus the sum of the Fund's liabilities (excluding leverage borrowings such as bank or institutional borrowings, preferred stock, bonds, debentures, etc.) and accrued dividends. Notwithstanding the foregoing, until such time as more than 50% of the value of the Fund's assets are invested in equity securities, the Advisory Fee shall be computed as follows: (i) 0.04167% of the net asset value of the Fund less net investment income for such month as of the close of business on the last business day of the month (0.50% on an annual basis); plus (ii) 2.5% of the sum of (a) the Fund's dividend and interest income; less (b) interest on borrowed funds during such month. The Advisory Fee is the maximum aggregate fee that is to be paid to the Adviser and any co-Adviser or sub-adviser under this and any other co-advisory or sub-advisory agreements. Fee Split Between Adviser and Co-Adviser The Advisory Fee shall initially be split among the Adviser and Co-Adviser 25% to Boulder Investment Advisers LLC and 75% to Stewart Investment Advisers. EX-99.2I 21 ex2-i.txt EXHIBIT 2(I) EXHIBIT (i) DEFERRED COMPENSATION PLAN OF KALMAN J. COHEN, DIRECTOR USLIFE INCOME FUND, INC. DEFERRED COMPENSATION PLAN AS AMENDED AUGUST 13, 1986 1. Eligibility Each member of the Board of Directors of USLIFE Income Fund, Inc. (the" Fund") who is not also an employee of the Fund, or any of its subsidiaries, is eligible to participate in this Deferred Compensation Plan (the "Plan"), pursuant to the terms and conditions as described herein. 2. Participation by Non-Employee Directors (a) On the date of adoption of this Plan and at any time thereafter, each non-employee Director may elect to participate in the Plan by directing that all or part of the compensation which would otherwise have been payable to him for services as a Director (including any fees payable for services as a member of a committee of a Board) shall be credited to a deferred compensation account subject to the terms of the Plan. (b) An election to participate in the Plan shall be in the form of a document executed by a non-employee Director and filed with the Secretary of the Fund, and such election shall continue in effect until such non-employee Director ceases to be a Director or is otherwise ineligible for the Plan, or until such non-employee Director terminates such election, in whole or in part, by written notice filed with the Secretary of the Fund. Any such termination, in whole or in part, shall become effective at the close of the calendar quarter ending immediately following the date on which the Secretary receives such notice with respect to all compensations and fees payable thereafter, or at the termination of such later calendar quarter as may be designated in the notice of termination. (c) A non-employee Director who has filed a termination of election may thereafter file an election to participate for any future calendar quarters, at any time with respect to compensation and fees payable to him as a non-employee Director of the Fund. Such election shall be as provided in paragraph 2(b) hereof. 3. Deferred Compensation Accounts (a) All deferred accounts shall be held with the general funds of the Fund. shall be credited to an account in the name of the individual Director and shall bear interest. as described herein, from the date such fees were first awarded or would otherwise have been paid. (b) The participant's deferred compensation account shall be credited at the end of each quarter with an interest equivalent. The interest equivalent shall be calculated at the rate of 2-1/2% quarterly (or such other rate as is set by the Board), which rate shall be applied to the amounts in each participant's account at the beginning of such quarter. (c) The Board of Directors intends to review and set the interest rate described in Section 3(b) at least annually in the light of current economic conditions. provided however, that in the event that the rate is not modified the interest equivalent shall continue to be calculated at the rate as last set forth by the Board of Directors. 4. Distribution (a) Each non-employee Director who elects to participate in this Plan may make an election or may modify any prior election with respect to the distribution of the amounts deferred under the Plan plus accumulated interest in a single lump sum or annual installments. Elections for distribution and any designation of beneficiary (which designation may name an entity other than a natural person) shall first be made by non-employee Directors at the time that they elect to participate in the Plan. Any modification of a prior election to receive payment in a lump sum or annual installments shall be made no later than the end of the calendar year preceding the year in which a non-employee Director ceases to serve as a Director. Any beneficiary designation, change or cancellation may be made at any time. A Director may elect to receive amounts deferred under the Plan plus accumulated interest in one payment or in some other number of approximately equal annual installments (not exceeding 10). The first installment (or the single payment if so elected) shall be paid on the tenth day of the calendar year immediately following the year in which a non-employee Director ceases to be a Director of the Fund. Subsequent installments, if any, shall be paid on the tenth day of each succeeding calendar year until the entire amount credited to the individual's account shall have been paid in full. Amounts held pending distribution pursuant to this paragraph shall continue to accrue interest as provided in Section 3 of this Plan until the date of distribution. (b) The election or any modification of a prior election with respect to the distribution of amounts deferred under the Plan plus accumulated interest shall be contained in a Notice of Election in a form provided by the Secretary of the Fund. and shall be executed by the Director and filed with the Secretary of the Fund. (c) Notwithstanding any election made by a Director, in the event such Director becomes a proprietor, officer, partner, employee, or otherwise affiliated with any business that is in competition with the Fund or any of its subsidiaries, directly or indirectly, or becomes employed by any governmental agency having jurisdiction over the activities of the Fund or any of its subsidiaries, the entire balance of his deferred fees, including interest, shall be paid immediately to him in a single payment. (d) If a Director should die before full payment of all amounts credited to his account, the balance of his account shall be paid either (1) in a single lump sum payment on the tenth day of the calendar year immediately following the date of his death to (i) his designated beneficiary or beneficiaries, if a single lump sum payment has been elected for them; or (ii) his estate, if no beneficiaries have been named or the designated beneficiaries have predeceased the Director, OR, (2) in approximately equal annual installments to his designated beneficiary or beneficiaries in the number of annual installments (not exceeding ten) elected for the beneficiary so long as the number of any prior, annual installments paid to the Director and those elected for the beneficiary do not exceed 10. (e) A Director shall bear full responsibility for the accuracy and legal sufficiency of any such beneficiary designation. At any time, and from time to time, any such designation may be changed or cancelled by the Director without the consent of any beneficiary. Any such designation, change or cancellation must be by written notice filed with the Secretary of the Fund and shall not be effective until received by the Secretary. If a Director designates more than one beneficiary, any payments to such beneficiaries shall be made in equal shares unless the Director has designated otherwise. In the absence of a written notice contesting a beneficiary designation or otherwise contesting a distribution received by the Secretary of the Fund before the date of distribution, distribution will be made in accordance with the beneficiary designation of record. 5. Miscellaneous (a) No deferred compensation or fees or interest thereon provided for in this Plan shall be subject to assignment, attachment, lien, levy, or other creditors' rights under state or federal law. (b) The Fund shall not be required to reserve, or otherwise set aside, funds for the payment of its obligations hereunder. (c) Copies of the Plan and any and all amendments thereto shall be made available at all reasonable times at the office of the Secretary of the Fund to all non-employee Directors. (d) This Deferred Compensation Plan may be amended prospectively, from time to time, by the Board of Directors of the Fund, and the interest rate applicable hereunder may be set prospectively by the Board as provided in Section 3 hereof, but no amendment shall, in any event, be made to the Plan which would reduce the amounts already earned by any non-employee Director or change the date or provisions for distribution of such amounts. unless each non-employee Director personally approves such amendments insofar as the amendments affect him. USLIFE INCOME FUND, INC. NOTICE OF ELECTION TO DEFER NON-EMPLOYEE DIRECTOR'S COMPENSATION Pursuant to the terms of the unfunded Deferred Compensation Plan of USLIFE Income Fund, Inc., adopted at a meeting of the Board of Directors held on November 1, 1979, and as amended January 11, 1984 and August 13,1986, at which times a quorum was present and at all times acting, I hereby elect to defer receipt of (specify portion, e.g. all, half, or a percentage or dollar amount) of my compensation payable to and receivable by me in consideration for my services as a non-employee Director of USLIFE Income Fund, Inc. (including fees payable for services as a member of a committee of the Board) effective _________________. Such election shall continue in effect until such time as I file written notice of termination (or a change in the amount of compensation to be deferred) with the Secretary of USLIFE Income Fund, Inc., or such time as I cease to be a non-employee Director of become otherwise ineligible for the Plan. I also hereby elect that all amounts deferred under the Plan, together with accumulated interest, shall be distributed to me in ________ (specify number not exceeding 10) equal annual installments), of which the first installment (or the single payment, if so elected) shall be paid on the tenth day of the calendar year immediately following the year in which I cease to be a Director of USLIFE Income Fund, Inc. and subsequent installments, if any, shall be paid on the tenth day of each succeeding calendar year until the entire amount credited to my account shall have been paid in full.* I understand that in the event of my death, all amounts deferred pursuant to this Plan, together with accumulated interest, shall be payable in full in accordance with my Designation of Beneficiary on file with the Secretary of USLIFE Income Fund, Inc. or, if no beneficiaries have been named or the beneficiaries have predeceased me, to my estate on the tenth day of the calendar year immediately following date of death. Director Date: Please return this form to Richard G. Hohn. Vice President -Secretary, USLIFE Income Fund, Inc., 125 Maiden Lane, New York, NY 10038) Received: Vice President-Secretary Richard G. Hohn. Date: * Modifications of prior elections with respect to the distribution of amounts deferred under the Plan may be made no later than the end of the calendar year preceding the year in which a non-employee Director ceases to serve as a Director. Any beneficiary designation, change or cancellation may be made at any time. EX-99.2J 22 ex2-j.txt EXHIBIT 2(J) EXHIBIT (j) CUSTODY AGREEMENT CUSTODIAN CONTRACT This Contract between USLIFE Income Fund, Inc., a corporation organized and existing under the laws of Maryland, having its principal place of business at 2929 Allen Parkway, Houston, Texas 77019, hereinafter called the "Fund", and State Street Bank and Trust Company, a Massachusetts trust company, having its principal place of business at 225 Franklin Street, Boston, Massachusetts 02110, hereinafter called the "Custodian". WITNESSETH: That in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows: 1. Employment of Custodian and Property to be Held by It. The Fund hereby employs the Custodian as the custodian of its assets to be held in the United States pursuant to the provisions of the Fund's Articles of Incorporation (the "Articles"). The Fund agrees to deliver to the Custodian all securities and cash owned by it, and all payments of income, payments of principal or capital distributions received by it with respect to all securities owned by the Fund from time to time, and the cash consideration received by it for such new or treasury shares of capital stock of the Fund ("Shares") as may be issued or sold from time to time. The Custodian shall not be responsible for any property of the Fund held or received by the Fund and not delivered to the Custodian. Upon receipt of Proper Instructions (as such term is defined Section 3 below), the Custodian shall from time to time employ one or more sub-custodians located in the United States, but only in accordance with an applicable vote by the Board of Directors of the Fund (the "Board of Directors") and provided that the Custodian shall have no more or less responsibility or liability to the Fund on account of any actions or omissions of any sub-custodian so employed than any such sub-custodian has to the Custodian. 2. Duties of the Custodian with Respect to Property of the Fund Held By the Custodian in the United States. 2.1 Holding Securities. The Custodian shall hold and physically segregate for the account of the Fund all non-cash property of the Fund to be held in the United States, including all securities owned by the Fund, other than (a) securities which are maintained pursuant to Section 2.8 in a clearing agency which acts as a securities depository or in a book-entry system authorized by the U.S. Department of the Treasury (each a "Securities System") and (b) commercial paper of an issuer for which State Street Bank and Trust Company acts as issuing and paying agent ("Direct Paper") which is deposited and/or maintained in the Direct Paper System of the Custodian (the "Direct Paper System") pursuant to Section 2.9. 2.2 Delivery of Securities. The Custodian shall release and deliver domestic securities owned by the Fund held by the Custodian or in a Securities System account of the Custodian or in the Custodian's Direct Paper System. account (the "Direct Paper System Account") only upon receipt of Proper Instructions (as such term is defined Section 3 below), which may be continuing instructions when deemed appropriate by the parties, and only in the following cases: (a) Upon sale of such securities for the account of the Fund and receipt of payment therefore; (b) Upon the receipt of payment in connection with any repurchase agreement related to such securities entered into by the Fund; (c) In the case of a sale effected through a Securities System, in accordance with the provisions of Section 2.8 hereof; (d) To the depository agent in connection with tender or other similar offers for securities of the Fund; (e) T o the issuer thereof or its agent when such securities are called, redeemed, retired or otherwise become payable; provided that, in any such case, the cash or other consideration is to be delivered to the Custodian; (f) To the issuer thereof, or its agent, for transfer into the name of the Fund or into the name of any nominee or nominees of the Custodian or into the name or nominee name of any agent appointed pursuant to Section 2.7 or into the name or nominee name of any sub-custodian appointed pursuant to Section 1; or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new securities are to be delivered to the Custodian; (g) Upon the sale of such securities for the account of the Fund, to the broker or its clearing agent, against a receipt, for examination in accordance with "street delivery" custom; provided that in any such case, the Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Custodian's own negligence or willful misconduct; (h) For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian; (i) In the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian; (j) For delivery in connection with any loans of securities made by the Fund, but only against receipt of adequate collateral as agreed upon from time to time by the Custodian and the Fund, which may be in the form of cash or obligations issued by the United States government, its agencies or instrumentalities, except that in connection with any loans for which collateral is to be credited to the Custodian's account in the book-entry system authorized by the U.S. Department of the Treasury, the Custodian will not be held liable or responsible for the delivery of securities owned by the Fund prior to the receipt of such collateral; (k) For delivery as security in connection with any borrowing by the Fund requiring a pledge of assets by the Fund, but only against receipt of amounts borrowed; (l) For delivery in accordance with the provisions of any agreement among the Fund, the Custodian and a broker-dealer registered under the Securities Exchange Act of 1934 (the "Exchange Act") and a member of The National Association of Securities Dealers, Inc. ("NASD"), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange, or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Fund; (m) For delivery in accordance with the provisions of any agreement among the Fund, the Custodian, and a Futures Commission Merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures Trading Commission and/or any contract market, or any similar organization or organizations, regarding account deposits in connection with transactions by the Fund; or (n) For any other proper purpose, but only upon receipt of, in addition to Proper Instructions (as such term is defined in Section 3 below), a certified copy of a resolution of the Board of Directors or of the Fund's Executive Committee signed by an officer and certified by the Secretary or an Assistant Secretary thereof (a "Certified Resolution"), specifying the securities of the Fund to be delivered, setting forth the purpose for which such delivery is to be made, declaring such purpose to be a proper corporate purpose, and naming the person or persons to whom delivery of such securities shall be made. 2.3 Registration of Securities. Securities held by the Custodian (other than bearer securities) shall be registered in the name of the Fund or in the name of any nominee of the Fund or of any nominee of the Custodian which nominee shall be assigned exclusively to the Fund, unless the Fund has authorized in writing the appointment of a nominee to be used in common with other registered investment companies having the same investment adviser as the Fund, or in the name or nominee name of any agent appointed pursuant to Section 2.7 or in the name or nominee name of any sub-custodian appointed pursuant to Section 1. All securities accepted by the Custodian on behalf of the Fund under the terms of this Contract shall be in "street name" or other good delivery form. If, however, the Fund directs the Custodian to maintain securities in "street name", the Custodian shall utilize its best efforts only to timely collect income due the Fund on such securities and to notify the Fund on a best efforts basis only of relevant corporate actions including, without limitation, pendency of calls, maturities, tender or exchange offers. 2.4 Bank Accounts. The Custodian shall open and maintain a separate bank account or accounts in the United Stated in the name of the Fund, subject only to draft or order by the Custodian acting pursuant to the terms of this Contract, and shall hold in such account or accounts, subject to the provisions hereof, all cash received by it from or for the account of the Fund, other than cash maintained by the Fund in a bank account established and used in accordance with Rule 17f-3 under the Investment Company Act of 1940, as amended (the "1940 Act"). Funds held by the Custodian for the Fund may be deposited by it to its credit as Custodian in the Banking Department of the Custodian or in such other banks or trust companies as it may in its discretion deem necessary or desirable; provided, however, that every such bank or trust company shall be qualified to act as a custodian under the 1940 Act and that each such bank or trust company and the funds to be deposited with each such bank or trust company shall be approved by vote of a majority of the Board of Directors. Such funds shall be deposited by the Custodian in its capacity as Custodian and shall be withdrawable by the Custodian only in that capacity. 2.5 Collection of Income. Subject to the provisions of Section 2.3, the Custodian shall collect on a timely basis all income and other payments with respect to registered domestic securities held hereunder to which the Fund shall be entitled either by law or pursuant to custom in the securities business, and shall collect on a timely basis all income and other payments with respect to domestic bearer securities if, on the date of payment by the issuer, such securities are held by the Custodian or its agent thereof and shal1 credit such income, as collected, to the Fund's custodian account. Without limiting the generality of the foregoing, the Custodian shall detach and present for payment all coupons and other income items requiring presentation as and when they become due and shall collect interest when due on securities held hereunder. Income due the Fund on securities loaned pursuant to the provisions of Section 2.2 (j ) shall be the responsibility of the Fund. The Custodian will have no duty or responsibility in connection therewith, other than to provide the Fund with such information or data as may be necessary to assist the Fund in arranging for the timely delivery to the Custodian of the income to which the Fund is properly entitled. 2.6 Payment of Fund Monies. Upon receipt of Proper Instructions (as such term is defined in Section 3 below), which may be continuing instructions when deemed appropriate by the parties, the Custodian shall payout monies of the Fund in the following cases only: (a) Upon the purchase of domestic securities, options, futures contracts or options on futures contracts for the account of the Fund but only (a) against the delivery of such securities or evidence of title to such options, futures contracts or options on futures contracts to the Custodian (or any bank, banking firm or trust company doing business in the United States or abroad which is qualified under the 1940 Act to act as a custodian and has been designated by the Custodian as its agent for this purpose) registered in the name of the Fund or in the name of a nominee of the Custodian referred to in Section 2.3 hereof or in proper form for transfer; (b) in the case of a purchase effected through a Securities System, in accordance with the conditions set forth in Section 2.8 hereof; (c) in the case of a purchase involving the Direct Paper System, in accordance with the conditions set forth in Section 2.9; (d) in the case of repurchase agreements entered into between the Fund and the Custodian, or another bank, or a broker-dealer which is a member of NASD, (i) against delivery of the securities either in certificate form or through an entry crediting the Custodian's account at the Federal Reserve Bank with such securities or (ii) against delivery of the receipt evidencing purchase by the Fund of securities owned by the Custodian along with written evidence of the agreement by the Custodian to repurchase such securities from the Fund or (e) for transfer to a time deposit account of the Fund in any bank or thrift institution; such transfer may be effected prior to receipt of a continuation from a broker and/or the applicable bank pursuant to Proper Instructions (as such term is defined in Section 3 below); (b) In connection with conversion, exchange or surrender of securities owned by the Fund as set forth in Section 2.2 hereof; (c) For the payment of any expense or liability incurred by the Fund, including but not limited to the following payments for the account of the Fund: interest, taxes, management, accounting, transfer agent and legal fees, and operating expenses of the Fund whether or not such expenses are to be in whole or part capitalized or treated as deferred expenses; (d) For the payment of any dividends declared pursuant to the governing documents of the Fund; (e) For payment of the amount of dividends on Shares received in respect of securities sold short; or (f) For any other proper purpose, but only upon receipt of, in addition to Proper Instructions (as such term is defined in Section 3 below), a Certified Resolution specifying the amount of such payment, setting forth the purpose for which such payment is to be made, declaring such purpose to be a proper corporate purpose, and naming the person or persons to whom such payment is to be made. 2.7 Appointment of Agents. The Custodian may at any time or times in its discretion appoint (and may at any time remove) any other bank or trust company which is itself qualified under the 1940 Act to act as a custodian, as its agent to carry out such of the provisions of this Section 2 as the Custodian may from time to time direct; provided, however, that the appointment of any agent shall not relieve the Custodian of its responsibilities or liabilities hereunder. 2.8 Deposit of Fund Assets in Securities Systems. The Custodian may deposit and/or maintain securities owned by the Fund in a Securities System in accordance with applicable Federal Reserve Board and Securities and Exchange Commission rules and regulations, if any, and subject to the following provisions: (a) The Custodian may keep securities of the Fund in a Securities System provided that such securities are represented in an account of the Custodian in the Securities System (a "Securities System Account") which Account shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers; (b) The records of the Custodian with respect to securities of the Fund which are maintained in a Securities System shall identify by book-entry those securities belonging to the Fund; (c) The Custodian shall pay for securities purchased for the account of the Fund upon (i) receipt of advice from the Securities System that such securities have been transferred to the Securities System Account, and (ii) the making of an entry on the records of the Custodian to reflect such payment and transfer for the account of the Fund. The Custodian shall transfer securities sold for the account of the Fund upon (i) receipt of advice from the Securities System that payment for such securities has been transferred to the Securities System Account, and (ii) the making of an entry on the records of the Custodian to reflect such transfer and payment for the account of the Fund. Copies of all advices from the Securities System of transfers of securities for the account of the Fund shall identify the Fund, be maintained for the Fund by the Custodian and be provided to the Fund at its request. Upon request, the Custodian shall furnish the Fund confirmation of each transfer to or from the account of the Fund in the form of a written advice or notice and shall furnish to the Fund copies of daily transaction sheets reflecting each day's transactions in the Securities System for the account of the Fund; (d) The Custodian shall provide the Fund with any report obtained by the Custodian on the Securities System's accounting system, internal accounting control and procedures for safeguarding securities deposited in the Securities System; (e) The Custodian shall have received the initial or annual certificate required by Section 12 hereof; and (f) Anything to the contrary in this Contract notwithstanding, the Custodian shall be liable to the Fund for any loss or damage to the Fund resulting from use of the Securities System by reason of any negligence, misfeasance or misconduct of the Custodian or any of its agents or of any of its or their employees or from failure of the Custodian or any such agent to enforce effectively such rights as it may have against the Securities System; at the election of the Fund, it shall be entitled to be subrogated to the rights of the Custodian with respect to any claim against the Securities System or any other person which the Custodian may have as a consequence of any such loss or damage if and to the extent that the Fund has not been made whole for any such loss or damage. 2.9 Fund Assets Held in the Direct Paper System. The Custodian may deposit and/or maintain securities owned by the Fund in the Direct Paper System subject to the following provisions: (a) No transaction relating to securities in the Direct Paper System will be effected in the absence of Proper Instructions (as such term is defined in Section 3 below); (b) The Custodian may keep securities of the Fund in the Direct Paper System only if such securities are represented in the Direct Paper System Account which Direct Paper System Account shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers; (c) The records of the Custodian with respect to securities of the Fund which are maintained in the Direct Paper System shall identify by book-entry those securities belonging to the Fund; (d) The Custodian shall pay for securities purchased for the account of the Fund upon the making of an entry on the records of the Custodian to reflect such payment and transfer of securities to the account of the Fund. The Custodian shall transfer securities sold for the account of the Fund upon the making of an entry on the records of the Custodian to reflect such transfer and receipt of payment for the account of the Fund; (e) The Custodian shall furnish the Fund confirmation of each transfer to or from the account of the Fund, in the form of a written advice or notice, of Direct Paper on the next business day following such transfer and shall furnish to the Fund copies of daily transaction sheets reflecting each day's transaction in the Securities System for the account of the Fund; and (f) The Custodian shall provide the Fund with any report on its system of internal accounting control as the Fund may reasonably request from time to time. 2.10 Segregated Account. The Custodian shall upon receipt of Proper Instructions (as such term is defined Section 3 below) establish and maintain a segregated account or accounts for and on behalf of the Fund, into which account or accounts may be transferred cash and/or securities, including securities maintained in an account by the Custodian pursuant to Section 2.8 hereof, (i) in accordance with the provisions of any agreement among the Fund, the Custodian and a broker-dealer registered under the Exchange Act and a member of the NASD (or any futures commission merchant registered under the Commodity Exchange Act), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange (or the Commodity Futures Trading Commission or any registered contract market), or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Fund, (ii) for purposes of segregating cash or government securities in connection with options purchased, sold or written by the Fund or commodity futures contracts or options thereon purchased or sold by the Fund, (iii) for the purposes of compliance by the Fund with the procedures required by Investment Company Act Release No. 10666, or any subsequent release or releases of the Securities and Exchange Commission relating to the maintenance of segregated accounts by registered investment companies and (iv) for other proper purposes, but only upon receipt of, in addition to Proper Instructions (as such term is defined Section 3 below), a Certified Resolution setting forth the purpose or purposes of such segregated account and declaring such purpose to be a proper corporate purpose. 2.11 Ownership Certificates for Tax Purposes. The Custodian shall execute ownership and other certificates and affidavits for all federal and state tax purposes in connection with receipt of income or other payments with respect to domestic securities of the Fund held by it and in connection with transfers of such securities. 2.12 Proxies. The Custodian shall, with respect to the domestic securities held hereunder, cause to be promptly executed by the registered holder of such securities, if the securities are registered otherwise than in the name of the Fund or a nominee of the Fund, all proxies, without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Fund such proxies, all proxy soliciting materials and all notices relating to such securities. 2.13 Communications Relating to Fund Securities. Subject to the provisions of Section 2.3, the Custodian shall transmit promptly to the Fund all written information (including, without limitation, pendency of calls and maturities of domestic securities and expirations of rights in connection therewith and notices of exercise of call and put options written by the Fund and the maturity of futures contracts purchased or sold by the Fund) received by the Custodian from issuers of the securities being held for the Fund. With respect to tender or exchange offers, the Custodian shall transmit promptly to the Fund all written information received by the Custodian from issuers of the securities whose tender or exchange is sought and from the party (or his agents) making the tender or exchange offer. If the Fund desires to take action with respect to any tender offer, exchange offer or any other similar transaction, the Fund shall notify the Custodian at least three business days prior to the date on which the Custodian is to take such action. 3. Proper Instructions. Proper Instructions, as such term is used throughout this Contract, means a writing signed or initialed by one or more person or persons as the Board of Directors shall have from time to time authorized. Each such writing shall set forth the specific transaction or type of transaction involved, including a specific statement of the purpose for which such action is requested. Oral instructions will be considered Proper Instructions if the Custodian reasonably believes them to have been given by a person authorized to give such instructions with respect to the transaction involved. The Fund shall cause all oral instructions to be confirn1ed in writing. Upon receipt of a certificate of the Secretary or an Assistant Secretary as to the authorization by the Board of Directors accompanied by a detailed description of procedures approved by the Board of Directors, Proper Instructions may include communications effected directly between electro-mechanical or electronic devices provided that the Board of Directors and the Custodian are satisfied that such procedures afford adequate safeguards for the Fund's assets. For purposes of this Section, Proper Instructions shall include instructions received by the Custodian pursuant to any three-party agreement which requires a segregated asset account in accordance with Section 2.10. 4. Actions Permitted without Express Authority. The Custodian may in its discretion, without express authority from the Fund: (a) make payments to itself or others for minor expenses of handling securities or other similar items relating to its duties under this Contract, provided that all such payments shall be accounted for to the Fund; (b) surrender securities in temporary form for securities in definitive form; (c) endorse for collection, in the name of the Fund, checks, drafts and other negotiable instruments; and (d) in general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Fund except as otherwise directed by the Board of Directors. 5. Evidence of Authority. The Custodian shall be protected in acting upon any instructions, notice, request, consent, certificate or other instrument or paper believed by it to be genuine and to have been properly executed by or on behalf of the Fund. The Custodian may receive and accept a Certified Resolution as conclusive evidence (a) of the authority of any person to act in accordance with such vote or (b) of any determination or of any action by the Board of Directors pursuant to the Articles as described in such vote, and such vote may be considered as in full force and effect until receipt by the Custodian of written notice to the contrary. 6. Duties of Custodian with Respect to the Books of Account and Calculation of Net Asset Value and Net Income. The Custodian shall cooperate with and supply necessary information to the entity or entities appointed by the Board of Directors to keep the books of account of the Fund and/or compute the net asset value per Share. If so directed, the Custodian shall calculate weekly the net income related to domestic Fund assets held hereunder as described in the Fund's currently effective prospectus, shall advise the Fund weekly of the total amounts of such net income and, if instructed in writing by an officer of the Fund to do so, shall advise the Fund periodically of the division of such net income among its various components. 7. Records. The Custodian shall create and maintain all records relating to its activities and obligations under this Contract in such manner as will meet the obligations of the Fund under the 1940 Act, with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund and shall at all times during the regular business hours of the Custodian be open for inspection by duly authorized officers, employees or agents of the Fund and employees and agents of the Securities and Exchange Commission. The Custodian shall, at the Fund's request, supply, the Fund with a tabulation of securities owned by the Fund and held by the Custodian and shall, when requested to do so by the Fund and for such compensation as shall be agreed upon between the Fund and the Custodian, include certificate numbers in such tabulations. 8. Opinion of Fund's Independent Accountant. The Custodian shall take all reasonable action, as the Fund may from time to time request, to obtain from year to year favorable opinions from the Fund's independent accountants with respect to its activities hereunder in connection with the preparation of the Fund's Form N-2 and Form N-SAR or other annual reports to the Securities and Exchange Commission and with respect to any other requirements thereof. 9. Reports to Fund by Independent Public Accountants. The Custodian shall provide to the Fund, at such times as the Fund may reasonably require, reports by independent public accountants on the accounting system, internal accounting control and procedures for safeguarding securities, futures contracts and options on future contracts, including securities deposited and/or maintained in a Securities System, relating to the services provided by the Custodian under this Contract; such reports, shall be of sufficient scope and in sufficient detail, as may reasonably be required by the Fund, to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and if there are no such inadequacies, the reports shall so state. 10. Compensation of Custodian. The Custodian shall be entitled to reasonable compensation for its services and expenses as Custodian, as agreed upon from time to time between the Fund and the Custodian. 11. Responsibility of Custodian. So long as and to the extent that it is in the exercise of reasonable care, the Custodian shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Contract and shall be held harmless in acting upon any notice, request, consent, certificate or other instrument reasonably believed by it to be genuine and to be signed by the proper party or parties, including any futures commission merchant acting pursuant to the terms of a three-party futures or options agreement. The Custodian shall be held to the exercise of reasonable care in carrying out the provisions of this Contract, but shall be kept indemnified by and shall be without liability to the Fund for any action taken or omitted by it in good faith without negligence. It shall be entitled to rely on and may act upon advice of counsel (who may be counsel for the Fund) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. If the Fund requires the Custodian to take any action with respect to securities, which action involves the payment of money or which action may, in the opinion of the Custodian, result in the Custodian or its nominee assigned to the Fund being liable for the payment of money or incurring liability of some other form, the Fund, as a prerequisite to requiring the Custodian to take such action, shall provide indemnity to the Custodian in an amount and form satisfactory to it. If the Fund requires the Custodian, its affiliates, subsidiaries or agents, to advance cash or securities for any purpose (including but not limited to securities settlements and assumed settlement) or in the event that the Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Contract, except such as may arise from its or its nominee's own negligent action, negligent failure to act or willful misconduct, any property at any time held for the account of the Fund shall be security therefor and should the Fund fail to repay the Custodian promptly, the Custodian shall be entitled to utilize available cash and to dispose of the Fund's assets to the extent necessary to obtain reimbursement. In no event shall the Custodian be liable for indirect, special or consequential damages. 12. Effective Period, Termination and Amendment. This Contract shall become effective as of its execution, shall continue in full force and effect until terminated as hereinafter provided, may be amended at any time by mutual agreement of the parties hereto and may be terminated by either party by an instrument in writing delivered or mailed, postage prepaid to the other party , such termination to take effect not sooner than thirty (30) days after the date of such delivery or mailing; provided, however that the Custodian shall not act under Section 2.8 hereof in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the Board of Directors has approved the initial use of a particular Securities System, as required by Rule 17f-4 under the 1940 Act and that the Custodian shall not act under Section 2.9 hereof in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the Board of Directors has approved the initial use of the Direct Paper System; provided further, however, that the Fund shall not amend or terminate this Contract in contravention of any applicable federal or state regulations, or any provision of the Articles and further provided, that the Fund may at any time by action of the Board of Directors (i) substitute another bank or trust company for the Custodian by giving notice as described above to the Custodian, or (ii) immediately terminate this Contract in the event of the appointment of a conservator or receiver for the Custodian by the Comptroller of the Currency or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction. Upon termination of the Contract, the Fund shall pay to the Custodian such compensation as may be due as of the date of such termination and shall likewise reimburse the Custodian for its costs, expenses and disbursements. 13. Successor Custodian. If a successor custodian shall be appointed by the Board of Directors the Custodian shall, upon termination, deliver to such successor custodian at the office of the Custodian, duly endorsed and in the form for transfer, all securities and other assets of the Fund then held by it hereunder and shall transfer to an account of the successor custodian all of the Fund's securities held in a Securities System. If no such successor custodian shall be appointed, the Custodian shall, in like manner, upon receipt of a Certified Resolution, deliver at the office of the Custodian and transfer such securities, funds and other properties in accordance with such vote. In the event that no written order designating a successor custodian or Certified Resolution shall have been delivered to the Custodian on or before the date when such termination shall become effective, then the Custodian shall have the right to deliver to a. bank or trust company, which is a "bank" as defined in the 1940 Act doing business in Boston, Massachusetts or New York, New York of its own selection, having an aggregate capital, surplus, and undivided profits, as shown by its last published report, of not less than $25,000,000, all securities, funds and other properties held by the Custodian and all instruments held by the Custodian relative thereto and all other property held by it under this Contract and to transfer to an account of such successor custodian all of the Fund's securities held in any Securities System, Thereafter, such bank or trust company shall be the successor of the Custodian under this Contract. In the event that securities, funds and other properties remain in the possession of the Custodian after the date of termination hereof owing to failure of the Fund to procure the Certified Resolution to appoint a successor custodian, the Custodian shall be entitled to fair compensation for its services during such period as the Custodian retains possession of such securities, funds and other properties and the provisions of this Contract relating to the duties and obligations of the Custodian shall remain in full force and effect. 14. Interpretive and Additional Provisions. In connection with the operation of this Contract, the Custodian and the Fund, may from time to time agree on such provisions interpretive of or in addition to the provisions of this Contract as may in their joint opinion be consistent with the general tenor of this Contract. Any such interpretive or additional provisions shall be in a writing signed by both parties and shall be annexed hereto, provided that no such interpretive or additional provisions shall contravene any applicable federal or state regulations or any provision of the Articles of the Fund. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Contract. 15. Massachusetts Law to Apply. This Contract shall be construed and the provisions thereof interpreted under and in accordance with laws of The Commonwealth of Massachusetts. 16. Prior Contracts. This Contract supersedes and terminates, as of the date hereof, all prior contracts between the Fund and the Custodian relating to the custody of the Fund's assets. 17. Notices. Any notice, instruction or other instrument required to be given hereunder may be delivered in person to the offices of the parties as set forth herein during normal business hours or delivered prepaid registered mail or by telex, cable or telecopy to the parties at the following addresses or such other addresses as may be notified by any party from time to time. To the Fund: USLIFE Income Fund, Inc. c/o V ALIC 2929 Allen Parkway Houston, Texas 77019 Attention: Greg Seward, Treasurer Telephone: (713) 831-5301 Telecopy: (713) 831-5380 To the Custodian: State Street Bank and Trust Company Insurance and Bank Services Division 105 Rosemont Road -WES/2S Westwood, Massachusetts 02090-2318 Attention: Kenneth A. Bergeron, Vice President Telephone: (781) 302-5348 Telecopy: (781) 302-8048 Such notice, instruction or other instrument shall be deemed to have been served in the case of a registered letter at the expiration of five business days after posting, in the case of cable twenty-four hours after dispatch and, in the case of telex, immediately on dispatch and if delivered outside normal business hours it shall be deemed to have been received at the next time after delivery when normal business hours commence and in the case of cable, telex or telecopy on the business day after the receipt thereof. Evidence that the notice was properly addressed, stamped and put into the post shall be conclusive evidence of posting. 18. Shareholder Communications Election. Securities and Exchange Commission Rule 14b-2 requires banks which hold securities for the account of customers to respond to requests by issuers of securities for the names, addresses and holdings of beneficial owners of securities of that issuer held by the bank unless the beneficial owner has expressly objected to disclosure of this information. In order to comply with the rule, the Custodian needs the Fund to indicate whether it authorizes the Custodian to provide the Fund's name, address, and share position to requesting companies whose securities the Fund owns. If the Fund tells the Custodian "no", the Custodian will not provide this information to requesting companies. If the Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the Custodian is required by the rule to treat the Fund as consenting to disclosure of this information for all securities owned by the Fund or any funds or accounts established by the Fund. For the Fund's protection, the Rule prohibits the requesting company from using the Fund's name and address for any purpose other than corporate communications. Please indicate below whether the Fund consents or objects by checking one of the alternatives below. YES [X] The Custodian is authorized to release the Fund's name, address, and share positions. NO [_] The Custodian is not authorized to release the Fund's name, address, and share positions. 19. Reproduction of Documents. This Agreement and all schedules, exhibits, attachments and amendments hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto all/each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed as of the thirteenth day of April, 1998. STATE STREET BANK AND TRUST COMPANY By: /s/ Ronald E. Logue Title: Executive Vice President Date: April 21, 1998 CUSTODIAN SIGNATURE ATTESTED TO BY: /s/ Stephanie L. Poster Title: Executive Vice President Title: Vice President and Associate Counsel Date: April 21, 1998 USLIFE INCOME FUND, INC. By: /s/ Norman Jaskol Title: President Date: April 10, 1998 FUND SIGNATURE ATTESTED TO BY: By: /s/ Nori L. Gabert Title: Assistant Secretary Date: April 10, 1998 DATA ACCESS SERVICES ADDENDUM TO CUSTODIAN CONTRACT Addendum to the Custodian Contract between USLIFE Income Fund, Inc. (the "Customer") and State Street Bank and Trust Company ("State Street"). PREAMBLE WHEREAS, State Street has been appointed as custodian of certain assets of the Customer pursuant to a certain Custodian Contract dated as of April 19, 1998 (the "Custodian Contract"); WHEREAS, State Street has developed and utilizes proprietary accounting and other systems, including State Street's proprietary Multicurrency HORIZON Accounting System, in its role as custodian of the Customer, and maintains certain Customer-related data ("Customer Data") in databases under the control and ownership of State Street (the "Data Access Services"); and WHEREAS, State Street makes available to the Customer certain Data Access Services solely for the benefit of the Customer, and intends to provide additional services, consistent with the terms and conditions of this Addendum. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the parties agree as follows: I. SYSTEM AND DATA ACCESS SERVICES a. System. Subject to the terms and conditions of this Addendum, State Street hereby agrees to provide the Customer with access to State Street's Multicurrency HORIZON Accounting System and such other information systems (collectively, the "System") as may be selected and described in Attachment A, on a remote basis for the purpose of obtaining reports and information, solely on computer hardware, system software and telecommunication links as listed in Attachment B (the "Designated Configuration") of the Customer, or certain third parties approved by State Street that serve as investment advisors or investment managers of the Customer (the "Investment Advisor"), and solely with respect to the Customer or on any designated substitute or back-up equipment configuration with State Street's written consent, such consent not to be unreasonably withheld. b. Data Access Services. State Street agrees to make available to the Customer the Data Access Services subject to the terms and conditions of this Addendum and data access operating standards and procedures as may be issued by State Street from time to time. The ability of the Customer to originate electronic instructions to State Street on behalf of the Customer in order to (i) effect the transfer or movement of cash or securities held under custody by State Street or (ii) transmit accounting or other information (such transactions are referred to herein as "Client Originated Electronic Financial Instructions"), and (iii) access data for the purpose of reporting and analysis, shall be deemed to be Data Access Services for purposes of this Addendum. c. Additional Services. State Street may from time to time agree to make available to the Customer additional Systems that are not described in the attachments to this Addendum. In the absence of any other written agreement concerning such additional systems, the term "System" shall include, and this Addendum shall govern, the Customer's access to and use of any additional System made available by State Street and/or accessed by the Customer. 2. NO USE OF THIRD-PARTY SYSTEMS-LEVEL SOFTWARE State Street and the Customer acknowledge that in connection with the Data Access Services provided under this Addendum, the Customer will have access, through the Data Access Services, to Customer Data and to functions of State Street's proprietary systems; provided, however that in no event will the Customer have direct access to any third party systems-level software that retrieves data for, stores data from, or otherwise supports the System. 3. LIMITATION ON SCOPE OF USE a. Designated Equipment: Designated Location. The System and the Data Access Services shall be used and accessed solely on and through the Designated Configuration at the offices of the Customer or the Investment Advisor located in Houston ("Designated Location"). b. Designated Configuration: Trained Personnel. State Street shall be responsible for supplying, installing and maintaining the Designated Configuration at the Designated Location. State Street and the Customer agree that each will engage or retain the services of trained personnel to enable both parties to perform their respective obligations under this Addendum. State Street agrees to use commercially reasonable efforts to maintain the System so that it remains serviceable, provided, however, that State Street does not guarantee or assure uninterrupted remote access use of the System. c. Scope of Use. The Customer will use the System and the Data Access Services only for the processing of securities transactions, the keeping of books of account for the Customer and accessing data for purposes of reporting and analysis. The Customer shall not, and shall cause its employees and agents not to (i) permit any third party to use the System or the Data Access Services, (ii) sell, rent, license or otherwise use the System or the Data Access Services in the operation of a service bureau or for any purpose other than as expressly authorized under this Addendum, (iii) use the System or the Data Access Services for any fund, trust or other investment vehicle without the prior written consent of State Street, (iv) allow access to the System or the Data Access Services through terminals or any other computer or telecommunications facilities located outside the Designated Locations, (v) allow or cause any information (other than portfolio holdings, valuations of portfolio holdings, and other information reasonably necessary for the management or distribution of the assets of the Customer) transmitted from State Street's databases, including data from third party sources, available through use of the System or the Data Access Services to be redistributed or retransmitted to another computer, terminal or other device for other than use for or on behalf of the Customer or (vi) modify the System in any way, including without limitation, developing any software for or attaching any devices or computer programs to any equipment, system, software or database which forms a part of or is resident on the Designated Configuration. d. Other Locations. Except in the event of an emergency or of a planned System shutdown, the Customer's access to services performed by the System or to Data Access Services at the Designated Location may be transferred to a different location only upon the prior written consent of State Street. In the event of an emergency or System shutdown, the Customer may use any back-up site included in the Designated Configuration or any other back- up site agreed to by State Street, which agreement will not be unreasonably withheld. The Customer may secure from State Street the right to access the System or the Data Access Services through computer and telecommunications facilities or devices complying with the Designated Configuration at additional locations only upon the prior written consent of State Street and on terms to be mutually agreed upon by the parties. e. Title. Title and all ownership and proprietary rights to the System, including any enhancements or modifications thereto, whether or not made by State Street, are and shall remain with State Street. f. No Modification. Without the prior written consent of State Street, the Customer shall not modify, enhance or otherwise create derivative works based upon the System, nor shall the Customer reverse engineer, decompile or otherwise attempt to secure the source code for all or any part of the System. g. Security Procedures. The Customer shall comply with data access operating standards and procedures and with user identification or other password control requirements and other security procedures as may be issued from time to time by State Street for use of the System on a remote basis and to access the Data Access Services. The Customer shall have access only to the Customer Data and authorized transactions agreed upon from time to time by State Street and, upon notice from State Street, the Customer shall discontinue remote use of the System and access to Data Access Services for any security reasons cited by State Street; provided, that, in such event, State Street shall, for a period not less than 180 days (or such other shorter period specified by the Customer) after such discontinuance, assume responsibility to provide accounting services under the terms of the Custodian Contract. h. Inspections. State Street shall have the right to inspect the use of the System and the Data Access Services by the Customer and the Investment Advisor to ensure compliance with this Addendum. The on-site inspections shall be upon prior written notice to the Customer and the Investment Advisor and at reasonably convenient times and frequencies so as not to result in an unreasonable disruption of the Customer's or the Investment Advisor's business. 4. PROPRIETARY INFORMATION a. Proprietary Information. The Customer acknowledges and State Street represents that the System and the databases, computer programs, screen formats, report formats, interactive design techniques, documentation and other information made available to the Customer by State Street as part of the Data Access Services and through the use of the System constitute copyrighted, trade secret, or other proprietary information of substantial value to State Street. Any and all such information provided by State Street to the Customer shall be deemed proprietary and confidential information of State Street (hereinafter "Proprietary Information"). The Customer agrees that it will hold such Proprietary Information in the strictest confidence and secure and protect it in a manner consistent with its own procedures for the protection of its own confidential information and to take appropriate action by instruction or agreement with its employees who are permitted access to the Proprietary Information to satisfy its obligations hereunder. The Customer further acknowledges that State Street shall not be required to provide the Investment Advisor with access to the System unless it has first received from the Investment Advisor an undertaking with respect to State Street's Proprietary Information in the form of Attachment C to this Addendum. The Customer also acknowledges that State Street shall not be required to provide Customer's independent auditor with access to the System unless it has first received from such independent auditor an undertaking with respect to State Street's Proprietary Information in the form of Attachment C-l to this Addendum. The Customer shall use all commercially reasonable efforts to assist State Street in identifying and preventing any unauthorized use, copying or disclosure of the Proprietary Information or any portions thereof or any of the logic, formats or designs contained therein. b. Cooperation. Without limitation of the foregoing, the Customer shall advise State Street immediately in the event the Customer learns or has reason to believe that any person to whom the Customer has given access to the Proprietary Information, or any portion thereof, has violated or intends to violate the terms of this Addendum, and the Customer will, at its expense, co-operate with State Street in seeking injunctive or other equitable relief in the name of the Customer or State Street against any such person. c. Injunctive Relief. The Customer acknowledges that the disclosure of any Proprietary Information, or of any information which at law or equity ought to remain confidential, will immediately give rise to continuing irreparable injury to State Street inadequately compensable in damages at law. In addition, State Street shall be entitled to obtain immediate injunctive relief against the breach or threatened breach of any of the foregoing undertakings, in addition to any other legal remedies which may be available. d. Survival. The provisions of this Section 4 shall survive the termination of this Addendum. 5. LIMITATION ON LIABILITY a. Limitation on Amount and Time for Bringing Action. The Customer agrees that any liability of State Street to the Customer or any third party arising out of State Street's provision of Data Access Services or the System under this Addendum shall be limited to the amount paid by the Customer for the preceding 24 months for such services. In no event shall State Street be liable to the Customer or any other party for any special, indirect, punitive or consequential damages even if advised of the possibility of such damages. No action, regardless of form, arising out of this Addendum may be brought by the Customer more than two years after the Customer has knowledge that the cause of action has arisen. b. Limited Warranties. NO OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE MADE BY STATE STREET. c. Third-Party Data. Organizations from which State Street may obtain certain data included in the System or the Data Access Services are solely responsible for the contents of such data, and State Street shall have no liability for claims arising out of the contents of such third-party data, including, but not limited to, the accuracy thereof. d. Regulatory Requirements. As between State Street and the Customer, the Customer shall be solely responsible for the accuracy of any accounting statements or reports produced using the Data Access Services and the System and the conformity thereof with any requirements of law. e. Force Majeure. Neither party shall be liable for any costs or damages due to delay or nonperformance under this Addendum arising out of any cause or event beyond such party's control, including without limitation, cessation of services hereunder or any damages resulting therefrom to the other party, or the Customer as a result of work stoppage, power or other mechanical failure, computer virus, natural disaster, governmental action, or communication disruption. 6. INDEMNIFICATION The Customer agrees to indemnify and hold State Street harmless from any loss, damage or expense including reasonable attorney's fees, (a "loss") suffered by State Street arising from (i) the negligence or willful misconduct in the use by the Customer of the Data Access Services or the System, including any loss incurred by State Street resulting from a security breach at the Designated Location or committed by the Customer's employees or agents or the Investment Advisor and (ii) any loss resulting from incorrect Client Originated Electronic Financial Instructions. State Street shall be entitled to rely on the validity and authenticity of Client Originated Electronic Financial Instructions without undertaking any further inquiry as long as such instruction is undertaken in conformity with security procedures established by State Street from time to time. 7. FEES Fees and charges for the use of the System and the Data Access Services, if any, and related payment terms shall be as set forth in the fee schedule in effect from time to time between the parties related to the Custodian Contract (the "Fee Schedule"). Any tariffs, duties or taxes imposed or levied by any government or governmental agency by reason of the transactions contemplated by this Addendum, including, without limitation, federal, state and local taxes, use, value added and personal property taxes (other than income, franchise or similar taxes which may be imposed or assessed against State Street) shall be borne by the Customer. Any claimed exemption from such tariffs, duties or taxes shall be supported by proper documentary evidence delivered to State Street. 8. TRAINING, IMPLEMENTATION AND CONVERSION a. Training. State Street agrees to provide training, at a designated State Street training facility or at the Designated Location, to the Customer's personnel in connection with the use of the System on the Designated Configuration. The Customer agrees that it will set aside, during regular business hours or at other times agreed upon by both parties, sufficient time to enable all operators of the System and the Data Access Services, designated by the Customer, to receive the training offered by State Street pursuant to this Addendum. b. Installation and Conversion. State Street shall be responsible for the technical installation and conversion ("Installation and Conversion") of the Designated Configuration. The Customer shall have the fo1lowing responsibilities in connection with Installation and Conversion of the System: (i) The Customer shall be solely responsible for the timely acquisition and maintenance of the hardware and software that attach to the Designated Configuration in order to use the Data Access Services at the Designated Location. (ii) State Street and the Customer each agree that they will assign qualified personnel to actively participate during the Installation and Conversion phase of the System implementation to enable both parties to perform their respective obligations under this Addendum. 9. SUPPORT During the term of this Addendum, State Street agrees to provide the support services set out in Attachment D to this Addendum. 10. TERM OF ADDENDUM a. Term of Addendum. This Addendum shall become effective simultaneously with State Street's execution of the Custodian Contract and shall remain in full force and effect until terminated as herein provided. b. Termination of Addendum. Either party may terminate this Addendum (i) for any reason by giving the other party at least one-hundred and eighty days' prior written notice in the case of notice of termination by State Street to the Customer or thirty days' notice in the case of notice from the Customer to State Street of termination; or (ii) immediately for failure of the other party to comply with any material term and condition of the Addendum by giving the other party written notice of termination. In the event the Customer shall cease doing business, sha1l become subject to proceedings under the bankruptcy laws (other than a petition for reorganization or similar proceeding) or shall be adjudicated bankrupt, this Addendum and the rights granted hereunder sha1l, at the option of State Street, immediately terminate with notice to the Customer. This Addendum shall in any event terminate as to any Customer within 90 days after the termination of the Custodian Contract applicable to such Customer. c. Termination of the Right to Use. Upon termination of this Addendum for any reason, any right to use the System and access to the Data Access Services shall terminate and the Customer shall immediately cease use of the System and the Data Access Services. Immediately upon termination of this Addendum for any reason, the Customer shall return to State Street all copies of documentation and other Proprietary Information in its possession; provided, however, that in the event that either party terminates this Addendum or the Custodian Contract for any reason other than the Customer's breach, State Street shall provide the Data Access Services for a period of time and at a price to be agreed upon by the parties. 11. MISCELLANEOUS a. Assignment: Successors. This Addendum and the rights and obligations of the Customer and State Street hereunder shall not be assigned by either party without the prior written consent of the other party, except that State Street may assign this Addendum to a successor of all or a substantial portion of its business, or to a party controlling, controlled by, or under common control with State Street. b. Survival. All provisions regarding indemnification, warranty, liability and limits thereon, and confidentiality and/or protection of proprietary rights and trade secrets shall survive the termination of this Addendum. c. Entire Contract. This Addendum and the attachments hereto constitute the entire understanding of the parties hereto with respect to the Data Access Services and the use of the System and supersedes any and all prior or contemporaneous representations or agreements, whether oral or written, between the parties as such may relate to the Data Access Services or the System, and cannot be modified or altered except in a writing duly executed by the parties. This Addendum is not intended to supersede or modify the duties and liabilities of the parties hereto under the Custodian Contract or any other agreement between the parties hereto except to the extent that any such agreement specifically refers to the Data Access Services or the System. No single waiver of any right hereunder shall be deemed to be a continuing waiver. d. Severability. If any provision or provisions of this Addendum shall be held to be invalid, unlawful, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired. e. Governing Law. This Addendum shall be interpreted and construed in accordance with the internal laws of The Commonwealth of Massachusetts without regard to the conflict of laws provisions thereof. ATTACHMENT A to DATA ACCESS SERVICES ADDENDUM TO CUSTODIAN CONTRACT by and between USLIFE INCOME FUND, INC. AND STATE STREET BANK AND TRUST COMPANY Multicurrency HORIZON Accounting System Product Description X The Multicurrency HORIZON Accounting System is designed to provide lot level portfolio and general ledger accounting for SEC and ERISA type requirements and includes the following services: 1) recording of general ledger entries; 2) calculation of daily income and expense; 3) reconciliation of daily activity with the trial balance, and 4) appropriate automated feeding mechanisms to (i) domestic and international settlement systems, (ii) daily, weekly and monthly evaluation services, (iii) portfolio performance and analytic services, (iv) customer's internal computing systems and (v) various State Street provided information services products. GlobalQuest is designed to provide customer access to the following information maintained on The Multicurrency HORIZON Accounting System: 1) cash transactions and balances; 2) purchases and sales; 3) income receivables; 4) tax refund receivables; 5) daily priced positions; 6) open trades; 7) settlement status; 8) foreign exchange transactions; 9) trade history, and 10) daily, weekly and monthly evaluation services. X HORIZON Gateway:. HORIZON Gateway provides customers with the ability to (i) generate reports using information maintained on the Multicurrency HORIZON Accounting System which may be viewed or printed at the customer's location; (ii) extract and download data from the Multicurrency HORIZON Accounting System; and (iii) access previous day and historical data. The fo1lowing information which may be accessed for these purposes: I) holdings; 2) holdings pricing; 3) transactions, 4) open trades; 5) income; 6) general ledger and 7) cash. SaFiRe is designed to provide the customer with the ability to prepare its own financial reports by permitting the customer to access customer information maintained on the Multicurrency HORIZON Accounting System, to organize such information in a flexible reporting format and to have such reports printed on the customer's desktop or by its printing provider. State Street Interchange. State Street Interchange is an open information delivery architecture wherein proprietary communication products, data formats and workstation tools are replaced by industry standards and is designed to enable the connection of State Street s network to customer networks, thereby facilitating the sharing of information. ATTACHMENT B to DATA ACCESS SERVICES ADDENDUM TO CUSTODIAN CONTRACT by and between US LIFE INCOME FUND, INC. AND STATE STREET BANK AND TRUST COMPANY ATTACHMENT C to DATA ACCESS SERVICES ADDENDUM TO CUSTODIAN CONTRACT by and between USLIFE INCOME FUND, INC. AND STATE STREET BANK AND TRUST COMPANY Undertaking The undersigned understands that in the course of its employment as Investment Advisor to USLIFE Income Fund, Inc. (the "Customer") it will have access to State Street Bank and Trust Company's ("State Street") Multicurrency HORIZON Accounting System and other information systems (collectively, the "System"). The undersigned acknowledges that the System and the databases, computer programs, screen formats, report formats, interactive design techniques, documentation and other information made available to the undersigned by State Street as part of the Data Access Services provided to the Customer and through the use of the System constitute copyrighted, trade secret, or other proprietary information of substantial value to State Street. Any and all such information provided by State Street to the Undersigned shall be deemed proprietary and confidential information of State Street (hereinafter "Proprietary Information"). The undersigned agrees that it will hold such Proprietary Information in confidence and secure and protect it in a manner consistent with its own procedures for the protection of its own confidential information and to take appropriate action by instruction or agreement with its employees who are permitted access to the Proprietary Information to satisfy its obligations hereunder. The undersigned will not attempt to intercept data, gain access to data in transmission, or attempt entry into any system or files for which it is not authorized. It will not intentionally adversely affect the integrity of the System through the introduction of unauthorized code or data, or through unauthorized deletion. Upon notice by State Street for any reason, any right to use the System and access to the Data Access Services shall terminate and the undersigned shall immediately cease use of the System and the Data Access Services. Immediately upon notice by State Street for any reason, the undersigned shall return to State Street all copies of documentation and other Proprietary Information in its possession. THE VARIABLE ANNUITY LIFE INSURANCE COMPANY By: /s/ Normal Jaskol Title: President Date: Apri1 10, 1998 ATTACHMENT D to DATA ACCESS SERVICES ADDENDUM TO CUSTODIAN CONTRACT by and between USLIFE INCOME FUND, INC. AND STATE STREET BANK AND TRUST COMPANY Support During the term of this Addendum, State Street agrees to provide the following on-going support services: a. Telephone Support. The Customer Designated Persons may contact State Street's Multicurrency HORlZON Help Desk and Customer Assistance Center between the hours of 8 a.m. and 6 p.m. (Eastern time) on all business days for the purpose of obtaining answers to questions about the use of the System, or to report apparent problems with the System. From time to time, the Customer shall provide to State Street a list of persons, not to exceed five in number, who shall be permitted to contact State Street for assistance (such persons being referred to as "the Customer Designated Persons"). b. Technical Support. State Street will provide technical support to assist the Customer in using the System and the Data Access Services. The total amount of technical support provided by State Street shall not exceed 10 resource days per year. State Street shall provide such additional technical support as is expressly set forth in the fee schedule in effect from time to time between the parties (the "Fee Schedule"). Technical support, including during installation and testing, is subject to the fees and other terms set forth in the Fee Schedule. c. Maintenance Support. State Street shall use commercially reasonable efforts to correct system functions that do not work according to the System Product Description as set forth on Attachment A in priority order in the next scheduled delivery release or otherwise as soon as is practicable. d. System Enhancements. State Street will provide to the Customer any enhancements to the System developed by State Street and made a part of the System; provided that, sixty (60) days prior to installing any such enhancement, State Street shall notify the Customer and shall offer the Customer reasonable training on the enhancement. Charges for system enhancements shall be as provided in the Fee Schedule. State Street retains the right to charge for related systems or products that may be developed and separately made available for use other than through the System. e. Custom Modifications. In the event the Customer desires custom modifications in connection with its use of the System, the Customer shall make a written request to State Street providing specifications for the desired modification. Any custom modifications may be undertaken by State Street in its sole discretion in accordance with the Fee Schedule. f. Limitation on Support. State Street shall have no obligation to support the Customer's use of the System: (i) for use on any computer equipment or telecommunication facilities which does not conform to the Designated Configuration or (ii) in the event the Customer has modified the System in breach of this Addendum. FUNDS TRANSFER INSTRUCTIONS TELEPHONE CONFIRMATION Client /Investment Manager: THE VARIABLE ANNUITY LIFE INSURANCE COMPANY Authorized Initiators Please Type or Print Please provide a listing of your staff members who are currently authorized to INITIATE wire transfer instructions to State Street: NAME TITLE SPECIMEN SIGNATURE Norman Jaskol President Gregory R. Seward Treasurer Leon A. Olver Vice President Kathryn Pearce Assistant Treasurer Authorized Verifiers Please Type or Print Please provide a listing of your staff members who will be CALLED BACK to verify the initiation of repetitive wires of $10 mil/ion or more and all non repetitive wire instructions: NAME CALLBACK PHONE NUMBER DOLLAR LIMITATION (IF ANY) Hugo Gomez 1-713-831-5440 Kathryn Pearce 1-713-831-5412 /s/ Gregory R. Seward Type or Print Name Authorized Signature Treasurer Dated: April 15, 1998 FUNDS TRANSFER SECURITY PROCEDURES Selection Form Please select one or more of the funds transfer security procedures indicated below SWIFT SWIFT (Society for Worldwide Interbank Financial Telecommunication ) is a cooperative society owned and operated by member financial institutions that provides telecommunication services for its membership. Participation is limited to securities brokers and dealers, clearing and depository institutions, recognized exchanges for securities, and investment management institutions. SWIFT provides a number of security features through encryption and authentication to protect against unauthorized access, loss or wrong delivery of messages, transmission errors, loss of confidentiality and fraudulent changes to messages. SWIFT is considered to be one of the most secure and efficient networks for the delivery of funds transfer instructions. Selection of this security procedure would be most appropriate for existing SWIFT members. Standing Instructions Standing Instructions may be used where funds are transferred to a broker on the Client's established list of brokers with which it engages in foreign exchange transactions. Only the date, the currency and the currency amount are variable. In order to establish this procedure, State Street will send to the Client a list of the brokers that State Street has determined are used by the Client. The Client will confirm the list in writing, and State Street will verify the written confirmation by telephone. Standing Instructions will be subject to a mutually agreed upon limit. If the payment order exceeds the established limit, the Standing Instruction will be confirmed by telephone prior to execution. Remote Batch Transmission Wire transfer instructions are delivered via Computer-to-Computer (CPU-CPU) data communications between the Client and State Street. Security procedures include encryption and or the use of a test key by those individuals authorized as Automated Batch Verifiers. Clients selecting this option should have an existing facility for completing CPU-CPU transmissions. This delivery mechanism is typically used for high-volume business. Global Horizon Interchange Funds Transfer Service Global Horizon Interchange Funds Transfer Service (FTS) is a State Street proprietary microcomputer-based wire initiation system. FTS enables Clients to electronically transmit authenticated Fedwire, CHIPS or internal book transfer instructions to State Street. This delivery mechanism is most appropriate for Clients with a low-to- medium number of transactions (5- 75 per day), allowing Clients to enter, batch, and review wire transfer instructions on their PC prior to release to State Street. X Telephone Confirmation (Callback) Telephone confirmation will be used to verify all non-repetitive funds transfer instructions received via untested facsimile or phone. This procedure requires Clients to designate individuals as authorized Initiators and authorized verifiers. State Street will verify that the instruction contains the signature of an authorized person and prior to execution, will contact someone other than the originator at the Client's location to authenticate the instruction. Selection of this alternative is appropriate for Clients who do not have the capability to use other security procedures. X Repetitive Wires For situations where funds are transferred periodically (minimum of one instruction per calendar quarter) from an existing authorized account to the same payee (destination bank and account number) and only the date and currency amount are variable, a repetitive wire may be implemented. Repetitive wires will be subject to a mutually agreed upon limit. If the payment order exceeds the established limit, the instruction will be confirmed by telephone prior to execution. Telephone confirmation is used to establish this process. Repetitive wire instructions must be reconfirmed annually. This alternative is recommended whenever funds are frequently transferred between the same two accounts. X Transfers Initiated by Facsimile The Client faxes wire transfer instructions directly to State Street Mutual Fund Services. Standard security procedure requires the use of a random number test key for all transfers. Every six months the Client receives test key togs from State Street. The test key contains alpha-numeric characters, which the Client puts on each document faxed to State Street. This procedure ensures all wire instructions received via fax are authorized by the Client. We provide this option for Clients who wish to batch wire instructions and transmit these as a group to State Street Mutual Fund Services once or several times a day. IMPORTANT: SIGNATURE REQUIRED ON THE REVERSE SIDE FUNDS TRANSFER OPERATING GUIDELINES 1. OBLIGATION OF THE SENDER: State Street is authorized to promptly debit client's account(s) upon the receipt of a payment order in compliance with the selected Security Procedure chosen for funds transfer and in the amount of money that State Street has been instructed to transfer. State Street shall execute payment orders in compliance with the Security Procedure and with the Client's/Investment Manager's instructions on the execution date provided that such payment order is received by the customary deadline for processing such a request, unless the payment order specifies a later time. All payment orders and communications received after this time will be deemed to have been received on the next business day. 2. SECURITY PROCEDURE: The Client acknowledges that the Security Procedure it has designated on the Selection Form was selected by the Client from Security Procedures offered by State Street. The Client shall restrict access to confidential information relating to the Security Procedure to authorized persons as communicated in writing to State Street. The Client must notify State Street immediately if it has reason to believe unauthorized persons may have obtained access to such information or of any change in the Client's authorized personnel. State Street shall verify the authenticity of all instructions according to the Security Procedure. 3. ACCOUNT NUMBERS: State Street shall process all payment orders on the basis of the account number contained in the payment order. In the event of a discrepancy between any name indicated on the payment order and the account number, the account number shall take precedence and govern. 4. REJECTION: State Street reserves the right to decline to process or delay the processing of a payment order which (a) is in excess of the collected balance in the account to be charged at the time of State Street's receipt of such payment order; (b) if initiating such payment order would cause State Street, in State Street's sole judgment, to exceed any volume, aggregate dollar, network, time, credit or similar limits upon wire transfers which are applicable to State Street; or (c) if State Street, in good faith, is unable to satisfy itself that the transaction has been properly authorized. 5. CANCELLATION OR AMENDMENT: State Street shall use reasonable efforts to act on all authorized requests to cancel or amend payment orders received in compliance with the Security Procedure provided that such requests are received in a timely manner affording State Street reasonable opportunity to act. However, State Street assumes no liability if the request for amendment or cancellation cannot be satisfied. 6. ERRORS: State Street shall assume no responsibility for failure to detect any erroneous payment order provided that State Street complies with the payment order instructions as received and State Street complies with the Security Procedure. The Security Procedure is established for the purpose of authenticating payment orders only and not for the detection of errors in payment orders. 7. INTEREST AND LIABILITY LIMITS: State Street shall assume no responsibility for lost interest with respect to the refundable amount of any unauthorized payment order, unless State Street is notified of the unauthorized payment order within thirty (30) days of notification by State Street of the acceptance of such payment order. In no event shall State Street be liable for special, indirect or consequential damages, even if advised of the possibility of such damages and even for failure to execute a payment order. 8. AUTOMATED CLEARING HOUSE ("ACH") CREDIT ENTRIES/PROVISIONAL PAYMENTS : When a Client initiates or receives ACH credit and debit entries pursuant to these Guidelines and the rules of the National Automated Clearing House Association and the New England Clearing House Association, State Street will act as an Originating Depository Financial Institution and/or Receiving Depository Institution, as the case may be, with respect to such entries. Credits given by State Street with respect to an ACH credit entry are provisional until State Street receives final settlement for such entry from the Federal Reserve Bank. If State Street does not receive such final settlement, the Client agrees that State Street shall receive a refund of the amount credited to the Client in connection with such entry , and the party making payment to the Client via such entry shall not be deemed to have paid the amount of the entry. 9. CONFIRMATION STATEMENTS: Confirmation of State Street's execution of payment orders shall ordinarily be provided within 24 hours notice which may be delivered through State Street's proprietary information systems, such as, but not limited to Horizon and GlobaIQuest, or by facsimile or callback. The Client must report any objections to the execution of a payment order within 30 days. I understand and agree to the terms and conditions described above. I am authorized to sign on behalf of each of the mutua1 funds or other entities named on Schedule A attached. EACH OF THE PARTIES NAMED ON SCHEDULE A ATTACHED HERETO By: /s/ Gregory R. Seward, Treasurer April 10, 1998 FUNDS TRANSFER SCHEDULE A Name of Management Company: THE VARIABLE ANNUITY LIFE INSURANCE COMPANY Fund Name(s): USLIFE INCOME FUND, INC. Authorized Signature: /s/ Gregory R. Seward Date: April 10, 1998 STATE STREET BANK AND TRUST COMPANY U.S. LIFE INCOME FUND, INC. CUSTODIAN FEE SCHEDULE ADMINISTRATION (Domestic) Custody -Maintain custody of fund assets. Settle portfolio purchases and sales. Report buy and sell fails. Determine and collect portfolio income. Make cash disbursements and report cash transactions. Maintain investment ledgers, provide selected portfolio transactions, position and income reports. The administration fee shown below is an annual charge, billed and payable monthly. ANNUAL FEES PER PORTFOLIO Custody Maintenance Fee Per Portfolio Per Month $150.00 Portfolio Trades -For each line item processed - --------------------------------------------------------------- State Street Repos $ 7.00 - --------------------------------------------------------------- DTC or Fed Book Entry $10.00 - --------------------------------------------------------------- SSB Boston Commercial Paper Book Entry $10.00 - --------------------------------------------------------------- PTC Purchase, Sale, Deposit & Withdrawal $10.00 - --------------------------------------------------------------- All Other Trades $16.00 - --------------------------------------------------------------- Maturity Collections $ 8.00 - --------------------------------------------------------------- Option charge for each option written or closing contract, per issue, per broker $25.00 - --------------------------------------------------------------- Option expiration/option exercised $15.00 - --------------------------------------------------------------- Interest Rate Futures - no security movement $ 8.00 - --------------------------------------------------------------- Monitoring for calls and processing coupons - for each coupon issue held (monthly charge) $ 5.00 - --------------------------------------------------------------- - --------------------------------------------------------------- - --------------------------------------------------------------- Holdings Charge: For each issue maintained (annual charge) $30.00 Physical issues $66.00 - --------------------------------------------------------------- - --------------------------------------------------------------- Principal Reduction Payments Per Paydown $ 1.50 - --------------------------------------------------------------- - --------------------------------------------------------------- Dividend Charges (for items held at request of traders over record date in street form) $50.00 - --------------------------------------------------------------- ADMINISTRATION (FOREIGN) Custody - Maintain custody of fund assets. Settle portfolio purchases and sales. Report buy and sell fails. Determine and collect portfolio income. Make cash disbursements and report cash transactions. Monitor corporate actions. Withhold foreign taxes. File foreign tax reclaims. Annual fee in basis points per portfolio. - ---------------------------------------------------------------------------- Group I Group II Group III Group IV Group V Group VI - ---------------------------------------------------------------------------- Euroclear Australia Austria Denmark Mexico Greece - ---------------------------------------------------------------------------- Japan Canada Belgium Finland Portugal Malaysia - ---------------------------------------------------------------------------- Germany France Italy Spain Indonesia - ---------------------------------------------------------------------------- Hong Kong United Kingdom Thailand Sweden Turkey - ---------------------------------------------------------------------------- Netherlands New Zealand Philippines - ---------------------------------------------------------------------------- Norway - ---------------------------------------------------------------------------- Singapore - ---------------------------------------------------------------------------- Switzerland - ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------------- Group I Group II Group III Group IV Group V Group VI - ----------------------------------------------------------------------------------- First $50 Million 4 10 17 20 27 52 - ----------------------------------------------------------------------------------- Next $50 Million 4 10 15 18 27 52 - ----------------------------------------------------------------------------------- Over $100 Million 3 8 13 16 27 52 - -----------------------------------------------------------------------------------
Transaction Charges - -------------------------------------------------------------- Group I Group II Group III Group IV Group V Group VI - -------------------------------------------------------------- $30 $30 $45 $60 $75 $250 - -------------------------------------------------------------- BALANCE CREDIT Balance credits for all funds will be applied against the custody fees based on the 90 Day T-Bill rate announced weekly and adjusted by the current Federal Reserve requirements. The rate announced weekly (every Monday) at the Fed T-Bill auction will be utilized against the average collected balance in the Demand Deposit Account maintained at State Street Bank. SPECIAL SERVICES Fees for activities of a non-recurring nature such as fund consolidation or reorganizations, extraordinary security shipments and the preparation of special reports will be subject to negotiation. Fees for automated pricing, yield calculation and other special items will be negotiated separately. OUT OF POCKET EXPENSES A billing for the recovery of applicable out-of-pocket expenses will be made as of the end of each month. Out of Pocket expenses include, but are not limited to, the following: Telephone Wire Charges ($5.50 per wire) Postage and Insurance Courier Service Duplicating Archiving Legal Fees Supplies Related to Fund Records Rush Transfer - $8.00 each Transfer fees Sub-custodian Charges (e.g., Stamp Duties, Registration, etc.) Price Waterhouse Audit Letter Federal Reserve Fee for Return Check items over $2,500 - $4.25 GNMA Transfer - $15.00 each PTC Deposit/Withdrawal for same day turnarounds - $50.00 APPROVED BY: USLIFE INCOME FUND, INC. By: /s/ Gregory R. Seward Title: Treasurer Date: April 14, 1998 STATE STREET BANK AND TRUST COMPANY By: Title: Vice President Date: April 14, 1998 EX-99.2K 23 ex2-ki.txt EXHIBIT 2(K)(I) EXHIBIT (k)(i) TRANSFER AGENCY AGREEMENT CHASEMELLON SHAREHOLDER SERVICES SERVICE AGREEMENT AND FEE PROPOSAL FOR TRANSFER AGENT SERVICES TO USLIFE INCOME FUND, INC. Date: January 9, 1998 Transfer Agent Agreement TRANSFER AGENT AGREEMENT, dated November 13,1997 between USLife Income Fund, Inc., a. corporation ("Client"} and ChaseMellon Shareholder Services, L.L.C., a New Jersey limited liability company ("ChaseMellon"). 1. Appointment. Client appoints ChaseMellon as its transfer agent, registrar and dividend disbursing agent and ChaseMellon accepts such appointment in accordance with the following terms and conditions for all authorized shares of each class of stock listed in Annex A hereto (the "Shares"). 2. Term of Agreement. This Agreement shall commence on the date hereof and shall continue for a term of three years. Unless either party gives written notice of termination of this Agreement at least 60 days prior to the end of the three-year term, or any successive three-year term, this Agreement shall automatically renew for an additional three-year term. In the event this Agreement is terminated by Client, Client's notice must include a certified resolution of the Board of Directors of Client to such effect, instructions as to the disposition of records, as well as any additional documentation reasonably requested by ChaseMellon. Except as otherwise expressly provided in this Agreement, the respective rights and duties of Client and ChaseMellon under this Agreement shall cease upon termination of the appointment. 3. Duties of ChaseMellon. ChaseMellon will provide all necessary operational, administrative and management services for Client in the performance of the stock transfer, registrar, dividend disbursing, and other related services listed in Annex B hereto. 4. The Shares. Client represents, warrants and covenants to ChaseMellon that: a) the Shares issued and outstanding on the date hereof have been duly authorized, validly issued and are fully paid and are non-assessable; and any Shares to be issued hereunder, when issued, shall have been duly authorized, validly issued and fully paid and will be non-assessable. b) the Shares issued and outstanding on the date hereof have been duly registered under the Securities Act of 1933, as amended, and such registration has become effective, or are exempt from such registration; and have been duly registered under the Securities Exchange Act of 1934, as amended, or are exempt from such registration; c) any Shares to be issued hereunder, when issued shall have been duly registered under the Securities Act of 1933, as amended, and such registration shall have become effective or shall be exempt from such registration; and shall have been duly registered under the Securities Exchange Act of 1934, as amended, or shall be exempt from such registration. d) Client has paid or caused to be paid all taxes, if any, which were payable upon or in respect of the original issuance of the Shares issued and outstanding on the date hereof, and e) the execution and delivery of this Agreement, and the issuance and any subsequent transfer of the Shares hereunder, do not and will not conflict with, violate, or result in a breach of the terms, conditions or provisions of, or constitute a default under, the charter or the by-laws of Client, any law or regulation, any order or decree of any court or public authority having jurisdiction, or any mortgage, indenture, contract, agreement or undertaking to which Client is a party or by which it is bound and this Agreement is enforceable against Client in accordance with it terms, except as may be limited by bankruptcy , insolvency, moratorium, reorganization and other similar laws affecting the enforcement of creditor's rights generally. Client agrees to provide the documentation and notifications listed in Annex C hereto. 5. Compensation, Expenses, Scope of Agency and Indemnification. Client shall compensate ChaseMellon for its services hereunder in accordance with the fee schedule agreed to by the parties. Such fees shall be adjusted annually by the annual percentage of change in the latest Consumer Price Index of All Urban Consumers (CPI-U) for the Northeast region, 1982-84-100, as published by the U.S. Department of Labor, Bureau of Labor Statistics. Client shall reimburse ChaseMellon for all reasonable expenses, disbursements or advances incurred by it in accordance herewith. All amounts owed to ChaseMellon hereunder are due upon receipt of the invoice. Delinquent payments are subject to a late payment charge of one and one half percent (1.5%) per month commencing forty-five (45) days from the invoice date. Client agrees to reimburse ChaseMellon for any attorney's fees and any other costs associated with collecting delinquent payments. ChaseMellon may rely and shall be protected in acting or refraining from acting upon any Client communication authorized by this Agreement; upon any communication from any predecessor Transfer Agent or co-Transfer Agent or from any Registrar (other than ChaseMellon), predecessor Registrar or co-Registrar; and upon any other written instruction, notice, request, direction, consent, report, certificate or other instrument, paper or document believed by ChaseMellon to be genuine. ChaseMellon is authorized to refuse to make any transfer it deems improper. In the absence of gross negligence or intentional misconduct on its part, ChaseMellon shall not be liable for any action taken, suffered, or omitted by it or for any error of judgment made by it in the performance of its duties under this Agreement. ChaseMellon may consult with counsel (including internal counsel) whose advice shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reasonable reliance thereon. Client shall indemnify ChaseMellon for, and hold it harmless against, any loss, liability or expense incurred without gross negligence or intentional misconduct on its part arising out of or in connection with its duties under this Agreement, including and expenses of defending itself against any claim or liability in connection with its exercise or performance of any of its duties under this Agreement. In no case will ChaseMellon be liable for special, indirect, incidental or consequential loss or damages of any kind whatsoever (including but not limited to lost profits), even if ChaseMellon has been advised of the possibility of such damages. Any liability of ChaseMellon will be limited to the amount of fees paid by Client hereunder. The obligations of Client under this section shall survive the termination of this Agreement. 6. Notices. All notices, demands and other communications shall be in writing and sent or delivered to the addresses indicated on the signature page hereof. 7. Miscellaneous. This Agreement may not be amended or modified in any manner except by a written agreement signed by both ChaseMellon and Client. This Agreement shall be governed by, construed and interpreted in accordance with the laws of the State of New York, without reference to the choice of law doctrine of such state. ChaseMellon is acting solely as agent for Client under this Agreement and owes no duties hereunder to any other person. ChaseMellon undertakes to perform the duties and only the duties that are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against ChaseMellon. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the respective successors and assigns of Client and ChaseMellon. ChaseMellon shall not be liable for any failure or delays arising out of conditions beyond its reasonable control including, but not limited to, work stoppages, fires, civil disobedience, riots, rebellions, storms, electrical, mechanical, computer or communications facilities failures, acts of God or similar occurrences. The Schedules and Annexes hereto are an integral part of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly authorized officers as of the day and year above written. US LIFE INCOME FUND, INC. By: Name: Title: Address: Attn: CHASEMELLON SHAREHOLDER SERVICES. L.L.C. By: Name: Title: Address: Attn: Annex A STOCK SUBJECT TO THE AGREEMENT - ---------------------------------------------------------------- Number of Number of Authorized Authorized Shares Reserved Shares Issued for Future Number of and Outstanding Issuance Under Authorized (including Existing Class of Stock Shares Treasury Shares) Agreements - ---------------------------------------------------------------- Annex B SERVICES TO BE PROVIDED Account Maintenance Functions o Opening new accounts o Posting debits and credits o Maintaining certificate history o Placing and releasing stop transfer notations o Consolidating accounts o Coding accounts requiring special handling (e.g., "bad address," "do not mail," "VIP," etc.) o Processing address changes o Responding to shareholder correspondence o Providing a general 800 phone number for shareholder inquiries o Obtaining and posting Taxpayer Identification Number certifications pursuant to IDTCA regulations o Maintaining closed accounts for the purpose of research and tax reporting o Purging closed accounts that meet selective criteria o Providing unlimited on-line access to shareholder records o Training on system access Certificate Issuance Functions o Qualifying under the rules of the NYSE and AMEX to act in the dual capacity as transfer agent and registrar o Maintaining mail and window facilities for the receipt of transfer requests o Maintaining and securing unissued certificate inventory and supporting documents o Examining issuance or transfer requests to ensure that proper authority is being exercised o Verifying (to the extent possible) that surrendered certificates are genuine and have not been altered o Verifying that original issuances are properly authorized and have necessary regulatory approval o Verifying that Shares issued equal the amount surrendered o Verifying that no stop orders are held against the surrendered certificates o Issuing and registering new certificates o Recording canceled and issued certificates by registration, certificate number and Shares o Canceling surrendered certificates and storing for two years o Delivering completed transfers o Processing restricted and legal transfers upon presentment of appropriate supporting documentation o Preparing Daily Transfer or Management Summary Journals o Replacing lost, destroyed or stolen certificates provided that ChaseMellon is in receipt of (a) evidence acceptable to it of the loss, theft or destruction, and (b) a surety bond acceptable to ChaseMellon sufficient to indemnify and save it and Client harmless (charge imposed on shareholder) Proxy and Annual Meeting Functions o Identifying broker/nominee account requirements to determine amount of sets of material needed o Preparing and mailing proxy material and Annual Report o Suppressing the mailing of multiple Annual Reports to households requesting it o Tabulating proxies (both scanner and manual) returned by shareholders o Identifying shareholders who will attend the Annual Meeting o Providing Inspector(s) of Election for the Annual Meeting o Supporting efforts of any proxy solicitor o Preparing list of record date holders o Preparing report of final vote o Providing remote access to proxy tabulation system o Maintaining an automated link with DTC and ADP to receive transmissions of broker votes o Processing omnibus proxies for respondent banks Other Services o Preparing shareholder listings and labels o Preparing analytical reports o Mailing quarterly or periodic reports o Locating lost shareholders through Shareholder Asset Recovery Program ("SHARP") (If requested, the following services are subject to additional fees): Dividend Disbursement Functions o Preparing and mailing checks o Reconciling checks o Preparing payment register in list or microfiche form o Withholding and filing taxes for non-resident aliens and others o Filing federal tax information returns o Processing "B" and "C" Notices received from the IRS o Mailing required statements (Form 1099) to registered holders o Maintaining stop files and issuing replacement checks o Maintaining payment orders and addresses o Maintaining records to support escheat filings Dividend Reinvestment Services o Opening and maintaining participant accounts o Processing reinvestment and optional cash payments o Preparing participant statements of account, after each transaction, showing activity for current period o Processing liquidations and terminations according to plan specifications o Providing periodic investment reports to USLife Income Fund, Inc. o Preparing Form 1099B to report sales proceeds Other Services o Filing escheat reports through Escheat Management Option o Providing ACH, direct deposit services o Providing a dedicated toll free 800 number o Providing confidential voting for annual meeting o Dividend Disbursement Functions o Dividend Reinvestment Services Annex C DOCUMENTS AND NOTIFICATIONS TO BE DELIVERED TO CHASEMELLON UPON EXECUTION OF THIS AGREEMENT Client shall provide ChaseMellon with the following: 1. An adequate supply of Share certificates. 2. A copy of the resolutions adopted by the Board of Directors of Client appointing ChaseMellon as Transfer Agent and/or Registrar and Dividend Disbursement Agent, as the case may be, duly certified by the Secretary or Assistant Secretary of Client under the corporate seal. 3. A copy of the Certificate of Incorporation of Client, and all amendments thereto, certified by the Secretary of State of incorporation. 4. A copy of the By-laws of Client as amended to date, duly certified by the Secretary of Client under the corporate seal. 5. A certificate of the Secretary or an Assistant Secretary of Client, under its corporate seal, stating that: a. This Agreement has been executed and delivered pursuant to the authority of the Client's Board of Directors; b. The attached specimen Share certificate(s) are in substantially the form submitted to and approved by Client's Board of Directors for current use and the attached specimen Share certificates for each Class of Stock with issued and outstanding Shares are in the form previously submitted to and approved by Client's Board of Directors for past use; c. The attached list of existing agreements pursuant to which Shares have been reserved for future issuance specifying the number of reserved Shares subject to each such existing agreement and the substantive provisions thereof, is true and complete, or no Shares have been reserved for future issuance; d. Each shareholder list provided is true and complete (such certification may state that it is based upon the certification of the predecessor Transfer Agent or predecessor Registrar that prepared the list) or no Shares are outstanding; e. The name of each stock exchange upon which any of the Shares are listed and the number and identity of the Shares so listed; f. The name and address of each co-Transfer Agent, Registrar (other than ChaseMellon) or co-Registrar for any of the Shares and the extent of its appointment, or there are no co-Transfer Agents, Registrars (other than ChaseMellon) or co-Registrars for any of the Shares; NOTIFICATION OF CHANGES Client shall promptly notify ChaseMellon of the following: 1. Any change in the name of Client, amendment of its certificate of incorporation or its by-laws; 2. Any change in the title of a Class of Stock from that set forth in Column 1 of Schedule A; 3. Any change in the Number of Authorized Shares from that set forth in Column 2 of Schedule A; 4. Any change in existing agreements or any entry into new agreements, changing the Number of Authorized Shares Reserved for Future Issuance Under Existing Agreements from that listed in Column 4 of Schedule A hereto; 5. Any change in the number of outstanding Shares subject to stop orders or other transfer limitations; 6. The listing or delisting of any Shares on any stock exchange; 7. The appointment after the date hereof of any co-Transfer Agent, Registrar (other than ChaseMellon) or any co-Registrar for any of the Shares; 8. The merger of Client into, or the consolidation of Client with, or the sale or other transfer of the assets of Client substantially as an entirety to, another person; or the merger or consolidation of another person into or with Client; and 9. Any other change in the affairs of Client of which ChaseMellon must have knowledge to perform properly its duties under this Agreement. FEE SCHEDULE USLIFE INCOME FUND, INC. Initial Term of Agreement: Three (3) Years Fees Not Subject to Increase: Two (2) Years (During initial term only) SERVICE FEES Shareholder Accounts Maintained $ 4.50 New Shareholder Accounts Added 4.50 Certificates Issued and Registered 1.40 Certificates posted .30 Transfers Requiring Special Handling 7.50 Dividend Disbursement Services Abandoned Property Records Posted .30 Withholding of Federal Tax on Domestic 3.00 Residents Withholding Tax on Non-Resident Aliens 3.00 IRS Backup withholding 25.00 Dividend Reinvestment Annual Administration Fee for Dividend $2,500.00 Reinvestment Agent Dividend Reinvestments 2.50 Abandoned Property Per existing contract Proxy Preparation Analyzing Accounts to Produce Broker/Nominee .05 Search Card Labels Analyzing accounts to Prepare Broker/Nominee .05 List Proxy Preparation .15 Enclose Annual Report, Proxy, Proxy Statement .20 and return envelope Additional Enclosure .05 Certified Shareholder List .05 Prepare Second Proxy Cards .25 Enclose Proxy, Reminder Letter and return .15 envelope Proxy Tally Administrative Fee for Providing 2,500.00 Comprehensive Annual Meeting Services Administrative Services performed with Respect to Monitoring and Controlling 250.00 Downstream Proxies Incorporation of Respondent Banks Omnibus 35.00 Position into Tally File Tally Scannable Proxies for Quorum and One 0.37 Proposition Tally Additional Propositions 0.12 Tally Non-machine Readable Proxies 2.00 Other Services Prepare Labels .05 Affix Labels .03 Enclose Material for Mailing .05 Statistical .05 Sheet List .05 Expense and Other Charges Fees and Out of Pocket Expenses. All charges and fees, out of pocket costs, expenses and disbursements of ChaseMellon are due and payable by Client upon receipt of an invoice from ChaseMellon. Client shall pay for postage by mail date. The cost of stationary and supplies, such as transfer sheets, dividend checks, etc., together with a disbursement for telephone, postage, mail insurance, travel for annual meeting, link-up charges for ADP/IECA, tape charges from DTC, etc. are billed in addition to the above fees. For companies who participate in the Direct Registration System (DRS), ChaseMellon will provide a "sell" feature for disposal of book-entry shares held on behalf of a shareholder. Upon receipt of a sell request by the registered shareholder, ChaseMellon will process the request and remit the proceeds to the shareholder in the form of a check (less the appropriate handling charge and trading fee). The handling charge for each sell request is $15.00 and the trading fee is $0.12 per share. Initial Fee. A fee of $2,000.00 will be imposed for any additional activities associated with the acceptance of appointments involving initial public offerings (IPO's) and secondary offerings. The initial fee will cover the issuance of up to 200 certificates. Certificates issued over this threshold will be billed at $1.50 each. Termination Fee. In the event Client terminates prior to the termination of the initial term of this Agreement, the Client shall pay ChaseMellon a fee of one dollar ($1.00) per registered shareholder account then maintained for the Client on ChaseMellon's records, subject to a minimum fee of two thousand five hundred dollars ($2,500.00). This fee, subject to change upon written notification to the Client by ChaseMellon, is separate from any other amounts payable by the Client to ChaseMellon incidental to such termination, such as, the cost to produce and ship records, reports and unused certificate stock to a successor agent. It is also separate from any other fees for services under this Agreement, which would be accrued and payable by the Client to ChaseMellon prior to such termination. ChaseMellon may withhold the Client's records, reports and unused certificate stock from a successor agent pending the Client's payment in full of its fees and expenses owed under this Agreement. Conversion. There is usually no charge for converting the Client's files to ChaseMellon's system with the exception of outstanding check history from the current agent's file. A review of the current rules and formats will be made to determine if any situation exists which will require extraordinary effort to complete the conversion. Any charge will be discussed with the Client prior to work commencing. Interest. In the event Client shall default in the payment of any such charges, such defaulted sums shall bear interest or finance charges at the maximum applicable legal rate and all costs and expenses of effecting collection of any said sums, including a reasonable attorney's fee, shall be paid by Client. Legal, Technological Expenses. Certain legal expenses may be incurred in resolving matters not anticipated in the normal course of business. This may result in a separate charge to cover our expenses in resolving such matters; provided that any legal expenses charged to the Client shall be reasonable. In the event any Federal regulation and/or state or local law are enacted which require ChaseMellon to make any technological improvements and/or modifications to our current system, Client shall reimburse ChaseMellon, on a pro rata basis proportionate to the Client's registered shareholder base, for the costs associated with making such required technological improvements and/or modifications. Other Services. Fees for any services not specified, such as maintaining mail lists, storing canceled certificates after the initial two year period, escheating unclaimed property to the states, stock splits, exchanges, tenders, solicitation mailings and coding of dividend reinvestment and ACH accounts, etc., will be based on ChaseMellon's standard fees at the time of the request or, if no standard fees have been established, an appraisal of the work to be performed. CHASEMELLON SHAREHOLDER SERVICES LISTS/LABELS/ANALYSES FEE SCHEDULE LISTS Per name listed .035 LABELS Per label printed .035 ANALYSES Per name passed on data base .01 Per name listed in report .035 (MINIMUM charge for each of the above services will be based on 1,000 names listed or passed on data base or labels printed.) OUT-OF-POCKET EXPENSES Any expenses of this nature, which include but are not limited to telephone, facsimile transmissions, postage, insurance, messenger, stationary, etc., will be billed in addition to the above stated fees. CHASEMELLON SHAREHOLDER SERVICES MAILING SERVICES FEE SCHEDULE ADDRESSING Addressing mailing medium (per name) .035 AFFIXING Affixing labels (per label) .035 INSERTING Inserting Enclosures (Machine) 1st Enclosure (per piece) .040 2nd Enclosure (per piece) .025 3rd Enclosure (per piece) .020 4th Enclosure (per piece) .015 Inserting Enclosures (Manual) Charge will be determined based on analysis of work to be performed. (MINIMUM charge for each of the above mailing services will be based on 1,000 names, labels or pieces.) OUT-OF-POCKET EXPENSES Any expenses of this nature, which include but are not limited to telephone, facsimile transmissions, postage, insurance, messenger, stationary, etc., will be billed in addition to the above stated fees. EX-99.2K 24 ex2-kii.txt EXHIBIT 2(K)(II) EXHIBIT (k)(ii) ADMINISTRATION AGREEMENT ADMINISTRATION AGREEMENT This ADMINISTRATION AGREEMENT (the "Agreement") is dated as of January 23, 2002 and is between USLIFE INCOME FUND, INC., a Maryland corporation (the "Fund") whose principal offices are located at 1680 38TH Street, Suite 800, Boulder, CO. 80301, and FUND ADMINISTRATIVE SERVICES, LLC, a Colorado limited liability company (the "Administrator"), whose principal offices are located at 1680 38th Street, Suite 800, Boulder, CO. 80301. RECITALS A. The Fund is a closed-end management investment company organized as a Maryland corporation. B. The Fund desires to retain the Administrator to provide administrative services to the Fund, and the Administrator is willing to provide such services on the terms and subject to the conditions set forth in this Agreement. COVENANTS NOW, THEREFORE, in consideration of the premises and the mutual promises contained herein, and for other good and valuable consideration, the parties agree as follows: 1. Definitions. As Used in this Agreement: (a) "1933 Act" means the Securities Act of 1933, as amended. (b) "1934 Act" means the Securities Exchange Act of 1934, as amended. (c) "1940 Act" means the Investment Company Act of 1940, as amended. (d) "Adviser" means the investment adviser for the Fund as defined in the 1940 Act. (e) "Authorized Person" means any officer of the Fund and any other person duly authorized by the Fund's Board of Directors to give Oral Instructions and Written Instructions on behalf of the Fund. An Authorized Person's scope of authority may be limited by setting forth such limitation in a written document signed by both parties hereto. (f) "CEA" means the Commodities Exchange Act, as amended. (g) "Oral Instructions" mean oral instructions received by Administrator from an Authorized Person or from a person reasonably believed by Administrator to be an Authorized Person. Administrator may, in its sole discretion in each separate instance, consider and rely upon instructions it receives from an Authorized Person via electronic mail as Oral Instructions. (h) '"SEC" means the Securities and Exchange Commission. (i) "Securities Laws" means the 1933 Act, the 1934 Act, the 1940 Act and the CEA. (j) "Shares" means the shares of common stock of any series or class of the Fund. (k) "Written Instructions" means (i) written instructions signed by an Authorized Person and received by Administrator or (ii) trade instructions transmitted (and received by Administrator) by means of an electronic transaction reporting system access to which requires use of a password or other authorized identifier. The instructions may be delivered by hand, mail, tested telegram, cable, telex, facsimile sending device or email. 2. Appointment. The Fund hereby appoints Administrator to provide administration and accounting services in accordance with the terms set forth in this Agreement. Administrator accepts such appointment and agrees to provide such services. 3. Delivery of Documents. The Fund has provided or, where applicable, will provide Administrator with the following: (a) at Administrator's request, certified or authenticated copies of the resolutions of the Fund's Board of Directors approving the appointment of Administrator or its affiliates to provide services to the Fund and approving this Agreement. (b) A copy of the Fund's most recent effective registration statement. (c) A copy of the Fund's advisory agreement or agreements. (d) A copy of each additional Administration Agreement of the Fund, if any; and (e) Copies (certified or authenticated, where applicable) of any and all amendments or supplements to the foregoing. 4. Compliance with Rules and Regulations. Administrator undertakes to comply with all applicable requirements of the Securities Laws, and any laws, rules and regulations of governmental authorities having jurisdiction with respect to the duties to be performed by Administrator hereunder. Except as specifically set forth herein, Administrator assumes no liability for such compliance by the Fund or other entity. 5. Instructions. (a) Unless otherwise provided in this Agreement, Administrator shall act only upon Oral Instructions or Written Instructions. (b) Administrator shall be entitled to rely upon any Oral Instruction or Written Instruction it receives from an Authorized Person (or from a person reasonably believed by Administrator to be an Authorized Person) pursuant to this Agreement. Administrator may assume that any Oral Instruction or Written Instruction received hereunder is not in any way inconsistent with the provisions of organizational documents or this Agreement or of any vote, resolution or proceeding of the Fund's Board of Directors or of the Fund's shareholders, unless and until Administrator receives Written Instructions to the contrary. (c) The Fund agrees to forward to Administrator Written Instructions confirming Oral Instructions (except where such Oral Instructions are given by Administrator or its affiliates) so that Administrator receives the Written Instructions by the close of business on the same day that such Oral Instructions are received. The fact that such confirming Written Instructions are not received by Administrator or differ from the Oral Instructions shall in no way invalidate the transactions or enforceability of the transactions authorized by the Oral Instructions or Administrator's ability to rely upon such Oral Instructions. Where Oral Instructions or Written Instructions reasonably appear to have been received from an Authorized Person, Administrator shall incur no liability to the Fund in acting upon such Oral Instructions or Written Instructions provided that Administrator's actions comply with the other provisions of this Agreement. 6. Right to Receive Advice. (a) Advice of the Fund. If Administrator is in doubt as to any action it should or should not take, Administrator may request directions or advice, including Oral Instructions or Written Instructions, from the Fund. (b) Advice of Counsel. If Administrator shall be in doubt as to any question of law pertaining to any action it should or should not take, Administrator may request advice from counsel of its own choosing (who may be counsel for the Fund, the Fund's investment adviser or Administrator, at the option of Administrator). (c) Conflicting Advice. In the event of a conflict between directions or advice or Oral Instructions or Written Instructions, Administrator receives from the Fund and the advice Administrator receives from counsel, Administrator may rely upon and follow the advice of counsel. (d) Protection of Administrator. Administrator shall be protected in any action it takes or does not take in reliance upon directions or advice or Oral Instructions or Written Instructions it receives from the Fund or from counsel and which Administrator believes, in good faith, to be consistent with those directions or advice and Oral Instructions or Written Instructions. Nothing in this section shall be construed so as to impose an obligation upon Administrator (i) to seek such directions or advice or Oral Instructions or Written Instructions, or (ii) to act in accordance with such directions or advice or Oral Instructions or Written Instructions unless, under the terms of other provisions of this Agreement, the same is a condition of Administrator's properly taking or not taking such action. 7. Records; Visits. (a) The books and records pertaining to the Fund which are in the possession or under the control of Administrator shall be the property of the Fund. Such books and records shall be prepared and maintained as required by the 1940 Act and other applicable Securities Laws, rules and regulations. The Fund and Authorized Persons shall have access to such books and records at all times during Administrator's normal business hours. Upon the reasonable request of the Fund, copies of any such books and records shall be provided by Administrator to the Fund or an Authorized Person, at the Fund's expense. (b) Administrator shall keep the following records: (1) all books and records with respect to the Fund's books of account; (2) records of the Fund's securities transactions; and (3) all other books and records as the Fund is required to maintain pursuant to Rule 31a-1 of the 1940 Act. 8. Officers and Staff. The Administrator shall provide personnel to act as officers of the Fund, to do such things as are permitted in the Fund's Articles of Incorporation and By-laws, as each is amended to the date hereof. 9. Administrative Services. The Administrator shall provide the following administrative, accounting, legal and regulatory services to the Fund (collectively, the "Administrative Services"). It is intended that the Administrative Services provided by the Administrator shall be of an administrative nature only and shall under no circumstances include services associated with the provision of investment advisory services. (a) Negotiation of Service Provider Contracts. Administrator shall negotiate all contracts with Service Providers, supervise their obligations, and make periodic reports to the Board on their respective performance. For this purpose, "Service Provider" means the Fund's Investment Adviser(s), the Fund's transfer agent and registrar, the Fund's custodian, and all other service providers and vendors of the Fund. (b) Oversight of Service Providers. The Administrator shall maintain oversight with respect to the activities of the Service Providers and shall review all relevant reports, documentation and other work product prepared by the Service Providers including but not limited to: (1) Prepare quarterly broker security transactions summaries; (2) Prepare monthly security transaction listings; (3) Supply various normal and customary Fund statistical data as requested on an ongoing basis; (4) Prepare for execution and file the Fund's federal and state tax returns; (5) Monitor the Fund's status as a regulated investment company under Sub-chapter M of the Internal Revenue Code of 1986, as amended, and compliance with its investment objectives, policies and restrictions; (6) Prepare and file with the SEC the Fund's annual and semi-annual shareholder reports; (7) Prepare, coordinate with Fund's outside counsel and file with the SEC Post-Effective Amendments to the Fund's Registration Statement as needed, prepare reports to the SEC including the preparation and filing of semi-annual reports on Form N-SAR; (8) Prepare, coordinate with Fund's outside counsel and file with the SEC notices of Annual or Special Meetings of Shareholders and Proxy materials relating to such meetings; (9) Assist in obtaining the fidelity bond and directors' and officers' errors and omissions insurance policies for the Fund in accordance with the requirements of Rule 17g-1 and 17d-1(d)(7) under the 1940 Act as such bond and policies are approved by the Fund's Board of Directors; (10) Monitor the Fund's assets to assure adequate fidelity bond coverage is maintained; (11) Draft agendas, resolutions, minutes and materials for quarterly and special Board and Board committee meetings; (12) Coordinate the preparation, assembly and mailing of Board materials; (13) Maintain the Fund's corporate calendar to assure compliance with various filing and Board approval deadlines; (14) Coordinate contractual relationships and communications between the Fund and its contractual Service Providers; (15) Provide documentation regarding the current investments of the Fund and all trades executed by such investment adviser(s) as the Fund may engage from time to time (the "Adviser(s)"); (16) Calculate monthly, quarterly and annual total returns; (17) Calculate and monitor net realized and unrealized gains (losses) of the Fund; (18) Prepare weekly and month-end calculation of the Fund's NAV; (19) Determine the Fund's asset allocation; (20) Review any and all other reports produced by Service Providers in regards to the Fund; and (21) Construct, maintain and administer a website for the Fund. (c) Reports to the Board. The Administrator shall make periodic reports to the Board and insure that all relevant information regarding the Fund is made available to shareholders, analysts, investors, and the like through shareholder reports, proxy statements, press releases, other public documents and filings and other communications. (d) Dividend Recommendations and Compliance With Fund Policies. The Administrator shall, at the request of the Directors, study and make recommendations to the Directors regarding the Fund's dividend payout of income and capital gains, and the Fund's compliance with its policies and organizational documents, with the 1940 Act and with IRS tax codes and regulations. (e) General Management and Shareholder Communication. The Administrator shall provide general management and oversight for the Fund, to the extent not provided by the Adviser(s). The Administrator shall provide such necessary personnel and equipment to adequately receive and respond to all inquiries of the Fund's shareholders. (f) Directors & Officers Liability Insurance. At least annually, the Administrator shall solicit proposals and make recommendations to the Board regarding the availability, cost and acquisition of errors and omissions/directors and officers liability insurance, fidelity bonds, and such other insurance as might be required or prudent, as the Board may determine. (g) Disbursement Services. The Administrator shall review and approve all Fund expenses and cause them to be paid in a timely manner. (h) Personnel. Except as provided in Section 10 hereof, the Administrator shall, at its sole cost and expense, employ, engage or associate with itself such persons as it believes appropriate to assist it in performing its obligations under this Agreement. (i) Other Services Requested by the Board. The Administrator shall provide such other administrative services as may be reasonably requested from time to time by the Board. (j) Accounting Services. Administrator will perform the following accounting services (collectively, the "Accounting Services"), all of which are included under the definition of "Administrative Services": (1) Journalize investment, capital share and income and expense activities; (2) Verify investment buy/sell trade tickets when received from an investment adviser for the Fund and transmit trades to the Fund's Custodian for proper settlement; (3) Maintain individual ledgers for investment securities; (4) Maintain historical tax lots for each security; (5) Reconcile cash and investment balances of the Fund with the Fund's Custodian, and provide the Adviser(s) with the beginning cash balance available for investment purposes; (6) Update the cash availability throughout the day as required by the Adviser(s); (7) Post to and prepare the Statement of Assets and Liabilities and the Statement of Operations; (8) Calculate various contractual expenses (e.g., advisory and custody fees); (9) Monitor the expense accruals and notify an officer of the Fund of any proposed adjustments; (10) Control all disbursements and authorize such disbursements upon Written Instructions; (11) Calculate capital gains and losses; (12) Determine net income; (13) Obtain security market quotes from independent pricing services approved by the Board, or if such quotes are unavailable, then solicit an appropriate pricing protocol from the Adviser(s), subject to approval by the Board, and in either case calculate the market value of the Fund's investments; (14) Transmit or mail a copy of the daily portfolio valuation to the Adviser; (15) Compute net asset value; (16) As appropriate, compute yields, total returns, expense ratios, portfolio turnover rate and, if required, portfolio average dollar-weighted maturity; and (17) Prepare a monthly financial statement, which will include the following items: (i) Schedule of Investments; (ii) Statement of Assets and Liabilities; (iii) Statement of Operations; (iv) Statement of Changes in Net Assets; (v) Cash Statement, and (vi) Schedule of Capital Gains and Losses. 10. Outsourcing. It is anticipated that Administrator will outsource substantial responsibilities under this Agreement (the "Outsourced Responsibilities") to reputable service providers who are qualified and in the business of providing some or all of the services contemplated hereunder to registered investment companies ("Outsource Providers"). Although custodian and transfer agency and appurtenant responsibilities must be dealt with under separate agreements between the Fund, the Administrator and such service providers, for the purposes of this Agreement, such terms shall be included in the definition of "Outsourced Responsibilities". In particular, but not by way of limitation, Administrator will initially outsource the transfer agency services, Accounting Services and other specific Administrative Services to PFPC Inc. and will outsource custody services to PNC Bank. Notwithstanding the foregoing, the Administrator may, in its reasonable discretion, change Outsource Providers or reallocate all or any portion of the Accounting Services or other Outsourced Responsibilities hereunder to one or any number of Outsource Providers. Whenever Administrator proposes to enter into new agreements for the providing of any Outsourced Responsibilities, or if Administrator proposes to change Outsource Providers for any Administrative Services, it shall provide at least 60 days' prior written notice to the Board of the details of the anticipated change. 11. Best Efforts. The Administrator shall give the Fund the benefit of the Administrator's best judgment and efforts in rendering services under this Agreement. As an inducement to the Administrator's undertaking to render these services, the Fund agrees that the Administrator shall not be liable under this Agreement for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the performance of its obligations and duties under this Agreement, except a loss resulting from the Administrator's willful misfeasance, bad faith or gross negligence in the performance of such obligations and duties, or by reason of its reckless disregard thereof. 12. Compensation. (a) The Administration Fee. In consideration of the responsibilities assumed and the Administrative Services to be rendered by the Administrator under this Agreement, the Fund shall pay the Administrator a monthly fee (commencing on the Effective Date (defined below) calculated at an annual rate of thirty (30) basis points applied against the value of the Fund's average monthly net assets which, for the purposes of calculating such fee, will be deemed to be the average monthly value of the Fund's total assets minus the sum of the Fund's liabilities (excluding leverage, if any) (the "Administration Fee"). If the fees payable to the Administrator pursuant to this Section begin to accrue before the end of any month or if this Agreement terminates before the end of any month, the fees for the period from that date to the end of that month or from the beginning of that month to the date of termination, as the case may be, shall be prorated according to the proportion that the period bears to the full month in which the effectiveness or termination occurs. (b) All Inclusive Fee. The Administration Fee shall be "all-inclusive" in that it shall constitute the entirety of the fees that the Fund pays with respect to Administrative Services (including Accounting Services) as well as custody and transfer agency services. The Administration Fee shall not be construed to include outside auditor fees, outside legal services (e.g., Fund counsel and counsel for the independent directors), extraordinary expenses or board related expenses. It is understood and agreed that, because of the nature of the services, the Administrator is not capable of providing custody and transfer agency services under this Agreement and such services will be provided pursuant to separate custody and transfer agency agreements between the Fund, the Administrator and the respective custodian and transfer agent. Nonetheless, the Administration Fee shall include all custodian and transfer agency fees and the actual cost of such services paid by the Fund in the ordinary course of its business shall be deducted from the Administration Fee as accrued. 13. Reimbursement for Out of Pocket Expenses. The Fund shall reimburse Administrator for all out of pocket expenses incurred in connection with its duties hereunder, including travel expenses for Administrator's staff and the staff of the Outsource Providers to attend meetings of the Board of Directors as is reasonably necessary. 14. Liaison with Accountants. Administrator shall act as liaison with the Fund's independent public accountants and shall provide account analyses, fiscal year summaries, and other audit-related schedules with respect to the Fund. Administrator shall take all reasonable action in the performance of its duties under this Agreement to assure that the necessary information is made available to such accountants for the expression of their opinion, as required by the Fund. 15. Administrator's Systems. Administrator shall retain title to and ownership of any and all data bases, computer programs, screen formats, report formats, interactive design techniques, derivative works, inventions, discoveries, patentable or copyrightable matters, concepts, expertise, patents, copyrights, trade secrets, and other related legal rights utilized by Administrator in connection with the services provided by Administrator to the Fund. 16. Disaster Recovery. Administrator shall enter into and shall maintain in effect with appropriate parties one or more agreements making reasonable provisions for emergency use of electronic data processing equipment to the extent appropriate equipment is available. In the event of equipment failures, Administrator shall, at no additional expense to the Fund, take reasonable steps to minimize service interruptions. Administrator shall have no liability with respect to the loss of data or service interruptions caused by equipment failure, provided such loss or interruption is not caused by Administrator's own willful misfeasance, bad faith, negligence or reckless disregard of its duties or obligations under this Agreement. 17. Approval of Agreement. This Agreement shall become effective as of January 23, 2002 (the "Effective Date"), the date on which the Agreement was approved by vote of a majority of: (a) The Board of Directors of the Fund and (b) The Directors who are not "interested persons" (as defined in the 1940 Act) of the Fund and who have no direct or indirect financial interest in this Agreement (the "Non-Interested Directors"); (c) cast in person at a meeting called for the purpose of voting on such approval (the "Board Approval"). This Agreement shall continue in effect with respect to the Fund until August 31, 2003, and thereafter shall continue automatically for successive annual periods ending on the last day of August of each year, subject to the immediately following sentence, and provided such continuance receives Board Approval, including approval by the Non-Interested Directors. This Agreement may be terminated with respect to the Fund at any time, without payment of any penalty, by a vote of a majority of the outstanding voting securities of the Fund (as defined in the 1940 Act) or by a vote of a majority of the Fund's Board of Directors on 60 days' written notice to the Administrator or by the Administrator on 90 days' written notice to the Fund. This Agreement shall terminate automatically in the event of its assignment (as defined in the 1940 Act). 18. Confidentiality. Each party shall keep confidential any information relating to the other party's business ("Confidential Information"). Confidential Information shall include (a) any data or information that is competitively sensitive material, and not generally known to the public, including, but not limited to, information about product plans, marketing strategies, finances, operations, customer relationships, customer profiles, customer lists, sales estimates, business plans, and internal performance results, relating to the past, present or future business activities of the Fund or Administrator, their respective subsidiaries and affiliated companies and the customers, clients and suppliers of any of them; (b) any scientific or technical information, design, process, procedure, formula, or improvement that is commercially valuable and secret in the sense that its confidentiality affords the Fund or Administrator a competitive advantage over its competitors.; (c) all confidential or proprietary concepts, documentation, reports, data, specifications, computer software, source code, object code, flow charts, databases, inventions, know-how, and trade secrets, whether or not patentable or copyrightable; and (d) anything designated as confidential. Notwithstanding the foregoing, information shall not be subject to such confidentiality obligations if it (a) is already known to the receiving party at the time it is obtained; (b) is or becomes publicly known or available through no wrongful act of the receiving party; (c) is rightfully received from a third party who, to the best of the receiving party's knowledge, is not under a duty of confidentiality; (d) is released by the protected party to a third party without restriction; (e) is required to be disclosed by the receiving party pursuant to a requirement of a court order, subpoena, governmental or regulatory agency or law (provided the receiving party will provide the other party written notice of such requirement, to the extent such notice is permitted); (f) is relevant to the defense of any claim or cause of action asserted against the receiving party; or (g) has been or is independently developed or obtained by the receiving party. 19. Indemnification. The Fund agrees to indemnify and hold harmless Administrator and its affiliates from all taxes, charges, expenses, assessments, claims and liabilities (including, without limitation, reasonable attorneys fees and disbursements and liabilities arising under the Securities Laws and any state and foreign securities and blue sky laws) arising directly or indirectly from any action or omission to act which Administrator takes in connection with its provision of services to the Fund. Neither Administrator, nor any of its affiliates, shall be indemnified against any liability (or any expenses incident to such liability) caused by Administrator's or its affiliates' own willful misfeasance, bad faith, negligence or reckless disregard of its duties and obligations under this Agreement. 20. Responsibility of Administrator. (a) Administrator shall be under no duty to take any action hereunder on behalf of the Fund except as specifically set forth herein or as may be specifically agreed to by Administrator and the Fund in a written amendment hereto. Administrator shall be obligated to exercise care and diligence in the performance of its duties hereunder and to act in good faith in performing services provided for under this Agreement. Administrator shall be liable only for any damages arising out of Administrator's failure to perform its duties under this Agreement to the extent such damages arise out of Administrator's willful misfeasance, bad faith, negligence or reckless disregard of such duties. (b) Without limiting the generality of the foregoing or of any other provision of this Agreement, (i) Administrator shall not be liable for losses beyond its control, including without limitation (subject to Section 11), delays or errors or loss of data occurring by reason of circumstances beyond Administrator's control, provided that Administrator has acted in accordance with the standard set forth in Section 20(a) above, and (ii) Administrator shall not be under any duty or obligation to inquire into and shall not be liable for the validity or invalidity or authority or lack thereof of any Oral Instruction or Written Instruction, notice or other instrument which conforms to the applicable requirements of this Agreement, and which Administrator reasonably believes to be genuine. (c) Notwithstanding anything in this Agreement to the contrary, neither Administrator nor its affiliates shall be liable for any consequential, special or indirect losses or damages, whether or not the likelihood of such losses or damages was known by Administrator or its affiliates. (d) Each party shall have a duty to mitigate damages for which the other party may become responsible. 21. No Restrictions on Other Business. Except to the extent necessary to perform the Administrator's obligations under this Agreement, nothing herein shall be deemed to limit or restrict the right of the Administrator, or any affiliate of the Administrator, or any employee of the Administrator, to engage in any other business or to devote time and attention to the management or other aspects of any other business, whether of a similar or dissimilar nature, or to render services to any other corporation, firm, individual or association. 22. Miscellaneous Provisions. (a) Articles of Incorporation; Binding Effect. The Articles of Incorporation, establishing the Fund, together with all amendments thereto, is on file in the office of the Secretary of the State of Maryland. The obligations of the Fund are not personally binding upon, nor shall resort be had to the private property of, any of the officers, directors or shareholders of the Fund or any of their agents, but only the Fund's property shall be bound. (b) Governing Law. This Agreement shall be construed and its provisions interpreted in accordance with the laws of the State of Maryland. (c) Binding Agreement; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors. This Agreement shall not be assignable by either party under any circumstances. (d) Severability. If any term or provision hereunder, or any portion thereof, is held to be invalid or unenforceable, it shall not affect any other term or provision hereunder or any part thereof. (e) Survival. All promises, covenants, agreements, representations and warranties contained herein shall survive the execution and delivery, and the subsequent termination, of this Agreement and the transactions contemplated hereunder. (f) Entire Agreement. This Agreement contains the full, entire, and integrated agreement and understanding between the parties with respect to the covenants, promises and agreements herein described, and no representations, warranties, provisions, covenants, agreements or understandings, written or oral, not herein contained or referred to shall be of any force or effect. Except as otherwise provided herein, this Agreement may not be modified or amended except in writing signed by both of the parties hereto. (g) Counterparts. This Agreement may be executed in counterparts, all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above. THE FUND: THE ADMINISTRATOR: USLIFE INCOME FUND, INC., FUND ADMINISTRATIVE SERVICES, a Maryland Corporation LLC, a Colorado limited liability Company By: /s/ Stephen C. Miller By: /s/ Carl D. Johns Stephen C. Miller, President Carl D. Johns, Assistant Manager EX-99.2K 25 ex2-kiii.txt EXHIBIT 2(K)(III) EXHIBIT (k)(iii) AMENDMENT TO ADMINISTRATIVE AGREEMENT FIRST AMENDMENT TO ADMINISTRATION AGREEMENT THIS FIRST AMENDMENT TO ADMINISTRATION AGREEMENT (this "Amendment") is made as of the 14th day of October 2002, by and among Fund Administrative Services, L.L.C., a Colorado limited liability company (the "Administrator") and BOULDER GROWTH & INCOME FUND, INC., a Maryland corporation (formerly known as USLIFE Income Fund, Inc.) (the "Fund"). RECITALS A. The Fund and Administrator are parties to an Administration Agreement dated as of January 23, 2002, pursuant to which the Administrator provides certain administrative functions for the Fund (the "Original Agreement"). The Original Agreement together with the Amendment and any future amendments is collectively referred to herein as the "Agreement". B. Under the terms of the Original Agreement the Board of Directors of the Fund (the "Board") was to review, approve and renew the Original Agreement annually on the anniversary of the date of the Original Agreement beginning on January 23, 2004 (the "First Renewal Date"). C. Notwithstanding the First Renewal Date being in 2004, at a meeting of the Board on October 14, 2002, in conjunction with the renewal of the administration agreement with the Fund's "sister" fund, Boulder Total Return Fund, Inc. ("BTF"), the Administrator submitted a renewal proposal regarding the Agreement which recommended that the Agreement be synchronized with renewal of the administration agreement with BTF which expires, unless renewed, on December 31 of each year. D. The Board accepted the Administrator's recommendation and determined that it would be more efficient for the Fund to consider renewal of the Agreement on an annual basis in conjunction with the Board's review of the BTF administration agreement. Accordingly, the parties have agreed to amend the Original Agreement as follows. COVENANTS 1. Amendment. The first sentence of the last paragraph of Paragraph 17 (Approval of Agreement) of the Original Agreement is deleted and replaced with the following language: This Agreement shall continue in effect with respect to the Fund until December 31, 2002, and thereafter shall continue automatically for successive annual periods ending on the last day of each calendar year, subject to the immediately following sentence, and provided such continuance receives Board Approval, including approval by the Non-Interested Directors. 2. All Other Terms and Conditions Unchanged. All other terms and conditions of the Agreement shall remain unchanged and in full force and effect. 3. Counterparts. This Amendment may be executed in counterparts, each of which shall be deemed an original for all purposes, and together shall constitute one and the same Amendment. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first above written. THE FUND: THE ADMINISTRATOR: BOULDER GROWTH & INCOMD FUND, INC., FUND ADMINISTRATIVE SERVICES, L.L.C., a Maryland Corporation a Colorado limited liability company By: /s/ Stephen C. Miller By: /s/ Carl D. Johns Stephen C. Miller Carl D. Johns Its: President Its: Assistant Manager EX-99.2K 26 ex2-kiv.txt EXHIBIT 2(K)(IV) EXHIBIT (k)(iv) INFORMATION AGENT FEE AGREEMENT October 25, 2002 Boulder Growth & Income Fund, Inc. 1680 38th Street, suite 800 Boulder, CO 80301 Re: Letter of Agreement Gentlemen: This Letter of Agreement, including the Appendix attached hereto (collectively, this "Agreement"), sets forth the terms and conditions of the engagement of Georgeson Shareholder Communications Inc. ("GS") by Boulder Growth & Income Fund, Inc. (the "Company") to act as Information Agent in connection with its upcoming Rights Offer (the "Offer"). The term of the Agreement shall be the term of the Offer, including any extensions thereof. (a) Services. GS shall perform the services described in the Fees & Services Schedule attached hereto as Appendix I (collectively, the "Services"). (b) Fees. In consideration of GS' performance of the Services, the Company shall pay GS the amounts, and pursuant to the terms, set forth on the Fees & Services Schedule attached hereto as Appendix I. (c) Expenses. In connection with GS' performance of the Services, and in addition to the fees and charges discussed in paragraph (b) hereof, the Company agrees that it shall be solely responsible for the following costs and expenses, and that the Company shall, at GS' sole discretion, (i) reimburse GS for such costs and expenses actually incurred by GS, (ii) pay such costs and expenses directly and/or (iii) advance sufficient funds to GS for payment of such costs and expenses: o expenses incidental to the Offer, including postage and freight charges incurred in delivering Offer materials; o expenses incurred by GS in working with its agents or other parties involved in the Offer, including charges for bank threshold lists, data processing, telephone directory assistance, facsimile transmissions or other forms of electronic communication; o expenses incurred by GS at the Company's request or for the Company's convenience, including copying expenses, expenses relating to the printing of additional and/or supplemental material and travel expenses of GS' executives; o any other fees and expenses authorized by the Company and resulting from extraordinary contingencies which arise during the course of the Offer, including fees and expenses for advertising, media relations, stock watch and analytical services. (d) Compliance with Applicable Laws. The Company and GS hereby represent to one another that each shall use its best efforts to comply with all applicable laws relating to the Offer, including, without limitation, the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. (e) Indemnification. The Company agrees to indemnify and hold harmless GS and its stockholders, officers, directors, employees, agents and affiliates against any and all claims, costs, damages, liabilities, judgments and expenses, including the fees, costs and expenses of counsel retained by GS, which result from claims, actions, suits, subpoenas, demands or other proceedings brought against or involving GS which directly relate to or arise out of GS' performance of the Services (except for costs, damages, liabilities, judgments or expenses which shall have been determined by a court of law pursuant to a final and nonappealable judgment to have directly resulted from GS' gross negligence or intentional misconduct). In addition, the prevailing party shall be entitled to reasonable attorneys' fees and court costs in any action between the parties to enforce the provisions of this Agreement, including the indemnification rights contained in this paragraph. The indemnity obligations set forth in this paragraph shall survive the termination of this Agreement. (f) Governing Law. This Agreement shall be governed by the substantive laws of the State of New York without regard to its principles of conflicts of laws, and shall not be modified in any way, unless pursuant to a written agreement which has been executed by each of the parties hereto. The parties agree that any and all disputes, controversies or claims arising out of or relating to this Agreement (including any breach hereof) shall be subject to the jurisdiction of the federal and state courts in New York County, New York and the parties hereby waive any defenses on the grounds of lack of personal jurisdiction of such courts, improper venue or forum non conveniens. (g) Exclusivity. The Company agrees and acknowledges that GS shall be the sole Information Agent retained by the Company in connection with the Offer, and that the Company shall refrain from engaging any other Information Agent to render any Services, in a consultative capacity or otherwise, in relation to the Offer. (h) Additional Services. In addition to the Services, the Company may from time to time request that GS provide it with certain additional consulting or other services. The Company agrees that GS' provision of such additional services shall be governed by the terms of a separate agreement to be entered into by the parties at such time or times, and that the fees charged in connection therewith shall be at GS' then-current rates. (i) Confidentiality. GS agrees to preserve the confidentiality of (i) all material non-public information provided by the Company or its agents for GS' use in fulfilling its obligations hereunder and (ii) any information developed by GS based upon such material non-public information (collectively, "Confidential Information"). For purposes of this Agreement, Confidential Information shall not be deemed to include any information which (w) is or becomes generally available to the public in accordance with law other than as a result of a disclosure by GS or any of its officers, directors, employees, agents or affiliates; (x) was available to GS on a nonconfidential basis and in accordance with law prior to its disclosure to GS by the Company; (y) becomes available to GS on a nonconfidential basis and in accordance with law from a person other than the Company or any of its officers, directors, employees, agents or affiliates who is not otherwise bound by a confidentiality agreement with the Company or is not otherwise prohibited from transmitting such information to a third party; or (z) was independently and lawfully developed by GS based on information described in clauses (w), (x) or (y) of this paragraph. The Company agrees that all reports, documents and other work product provided to the Company by GS pursuant to the terms of this Agreement are for the exclusive use of the Company and may not be disclosed to any other person or entity without the prior written consent of GS. The confidentiality obligations set forth in this paragraph shall survive the termination of this Agreement. (j) Entire Agreement; Appendix. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties hereto with respect to the subject matter hereof. The Appendix to this Agreement shall be deemed to be incorporated herein by reference as if fully set forth herein. This Agreement shall be binding upon all successors to the Company (by operation of law or otherwise). If the above is agreed to by you, please execute and return the enclosed duplicate of this Agreement to Georgeson Shareholder Communications Inc., 17 State Street - 10th Floor, New York, New York 10004, Attention: Marcy Roth, Contract Administrator. Agreed to and accepted as of Sincerely, the date first set forth above: BOULDER GROWTH & INCOME FUND, INC. GEORGESON SHAREHOLDER COMMUNICATIONS INC. By: /s/ Stephen C. Miller By: /s/ Keith T. Haynes Stephen C. Miller Keith T. Haynes Title: President Title: Managing Director APPENDIX I FEES & SERVICES SCHEDULE BASE SERVICES $20,000 o Advice and Consultation with respect to set up and progress of Offer o Assistance in preparation and posting of advertisements o Dissemination of Offer documents to bank and broker community and communication with reorganization department managers PREMIUM SERVICES TBD o Telephone communications with target shareholders o $5.00 per completed call (incoming and outgoing) NOTE: The foregoing fees are exclusive of reimbursable expenses as described in paragraph (c) of this Agreement. In addition, the Company will be charged a fee of $1,000 if the Offer is extended for any reason. EX-99.2K 27 ex2-kv.txt EXHIBIT 2(K)(V) EXHIBIT (k)(v) SUBSCRIPTION AGENT FEE AGREEMENT [On the Letterhead of The Colbent Corporation] The Colbent Corporation -Proposal- A. Fees for Services* - ---------------------------------------------------------------------- Fee Service Provided - ---------------------------------------------------------------------- $5000.00 Project Management Fee ====================================================================== $ 1.00 Per subscription form issued and mailed ====================================================================== $ 6.00 Per subscription form processed (registered and beneficial) ====================================================================== $ 6.50 Per defective subscription form received ====================================================================== $ 7.50 Per notice of guaranteed delivery received ====================================================================== $ 1.00 Per broker split certificate issued ====================================================================== $ 1.50 Per sale of right (if applicable) ====================================================================== $ 2.25 Per invoice mailed (if applicable) ====================================================================== $ .75 Per refund check issued and mailed (if applicable) ====================================================================== $ 3.00 Per solicitation check processed and mailed (if applicable) ====================================================================== $ 6.00 Per withdrawal of subscription certificate (if applicable) ====================================================================== $1500.00 Per Pro-ration (if applicable) ====================================================================== $1500.00 Per offer extension ====================================================================== $5000.00 Minimum charge should the project be cancelled for any reason prior to the mailing of the subscription form ====================================================================== - ---------------------------------------------------------------------- * Excludes out-of-pocket expenses as described in Section C, "Items Not Covered" B. Services Covered o Designate an operational team to carry out Subscription Agent duties, including document review and execution of legal agreement, review of subscription forms and communication materials, project management and on-going project updates and reporting. o Calculating Rights to be distributed to each shareholder and printing shareholder information on the subscription form. o Issuing subscription forms, and causing forms to be mailed to registered shareholders. o Tracking and reporting the number of exercises made, as required. o Processing Rights received and exercised. o Deposit participant checks daily and forward all participant funds to Fund at the end of the offering period. o Providing receipt summation of checks received. o Issuing/ Printing (if applicable,) and mailing stock certificates and/or checks. o Interfacing with the Information Agent. o Calculating, issuing and mailing of proration and/or over-subscription checks if applicable. o Calculating, issuing and mailing of solicitation checks if applicable. C. Items Not Covered o Items not specified in the "Services Covered" section set forth in this Agreement, including any services associated with new duties, legislation or regulatory fiat which become effective after the date of this Agreement (these will be provided on an appraisal basis) o All out-of-pocket expenses such as telephone line charges, certificates, checks, postage, stationary, wire transfers and excess material disposal (these will be billed as incurred) o Reasonable legal review fees if referred to outside counsel. o Overtime charges assessed in the event of late delivery of material for mailings unless the target mail date is rescheduled. D. Assumptions o Proposal based upon document review and information known at this time about the transaction. o Significant changes made in the term or requirements of this transaction could require modifications to this proposal. o Proposal must be executed prior to the initial mailing. o Company responsible for printing of materials (Rights Card, Prospectus and ancillary documents). o Material to be mailed to shareholders must be received no less than five (5) business days prior to the start of the mailing project.3 o No interest shall accrue to the company or the shareholders. E. Payment for Services o The Project Management Fee will be rendered and payable upon the effective date of the transaction. An invoice for any out-of-pocket and per items fees realized will be rendered and payable on a monthly basis, except for postage expenses in excess of $5,000.00. Funds for such mailing expenses must be received one (1) business day prior to the scheduled mail date. The Colbent Corporation BOULDER GROWTH & INCOME FUND By: /s/ Carmine C. Chirichiello By: /s/ Stephen C. Miller Carmine C. Chirichiello Stephen C. Miller Title: President, Title: President The Colbent Corporation Date 11/14/02 Date 11/15/02 EX-99.2L 28 ex2-li.txt EXHIBIT 2(L)(I) EXHIBIT (l)(i) OPINION AND CONSENT OF WILLKIE FARR & GALLAGHER [ON THE LETTERHEAD OF WILLKIE FARR & GALLAGHER] November 20, 2002 Boulder Growth & Income Fund, Inc. 1680 38th Street, Suite 800 Boulder, Colorado 80301 Ladies and Gentlemen: We have acted as counsel to Boulder Growth & Income Fund, Inc. (the "Fund"), a corporation organized under the laws of the State of Maryland, in connection with the issuance of up to 5,663,892 shares (the "Shares") of its common stock, par value $.01 per share (the "Common Stock"), pursuant to the exercise of rights (the "Rights") to purchase Common Stock to be distributed to the shareholders of the Fund (the "Offer") in accordance with the Fund's Registration Statement on Form N-2 under the Securities Act of 1933, as amended (File 333-100634), and under the Investment Company Act of 1940, as amended (File No. 811-7390) (the "Registration Statement"). We have examined copies of the Charter and By-Laws of the Fund, as amended or supplemented as of the date hereof, the Registration Statement, resolutions adopted by the Fund's Board of Directors and other records and documents that we have deemed necessary for the purpose of this opinion. We have also examined such other documents, papers, statutes and authorities as we have deemed necessary to form a basis for the opinion hereinafter expressed. In our examination, we have assumed the genuineness of all signatures and the conformity to original documents of all copies submitted to us. As to various questions of fact material to our opinion, we have relied upon statements and certificates of officers and representatives of the Fund and others. As to matters governed by the laws of Maryland, we have relied upon the opinion of Messrs. Venable, Baetjer and Howard, LLP that is attached to this opinion. Based upon the foregoing, we are of the opinion that the Shares of Common Stock to be issued upon exercise of the Rights have been duly authorized and that when the Shares have sold, issued and paid for as contemplated by the Prospectus, the Shares will be validly and legally issued, fully paid and nonassessable. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the caption "Legal Matters" in the Prospectus included as part of the Registration Statement. We do not thereby admit that we are "experts" as that term is used in the Securities Act of 1933, as amended, and the regulations thereunder. Very truly yours, /s/ Willkie Farr & Gallagher EX-99.2L 29 ex2-lii.txt EXHIBIT 2(L)(II) EXHIBIT (l)(ii) OPINION AND CONSENT OF VENABLE, BAETJER & HOWARD, LLP [ON THE LETTERHEAD OF VENABLE, BAETJER & HOWARD LLP] November 20, 2002 Willkie Farr & Gallagher 787 Seventh Avenue New York, New York 10019-6099 Re: Boulder Growth and Income Fund, Inc. ------------------------------------ Ladies and Gentlemen: We have acted as special Maryland counsel for Boulder Growth and Income Fund, Inc., a Maryland corporation (the "Fund"), in connection with the issuance of up to 5,663,892 shares (the "Shares") of its common stock, $.01 par value per share (the "Common Stock"), pursuant to the exercise of transferable rights (the "Rights") to purchase Common Stock to be distributed to the Fund's stockholders in accordance with the Fund's Registration Statement on Form N-2 (File No. 333-100634) (the "Registration Statement") (the "Rights Offering"). As Maryland counsel for the Fund, we are familiar with its Charter and Bylaws. We have examined the prospectus with respect to the Rights contained in the Registration Statement, substantially in the form in which it is to become effective (the "Prospectus"), and the form of subscription certificate for exercise of the Rights. We have examined and relied on a certificate of the Maryland State Department of Assessments and Taxation to the effect that the Fund is duly incorporated and existing under the laws of the State of Maryland and is in good standing and duly authorized to transact business in the State of Maryland. We have further examined and relied on a certificate of an officer of the Fund with respect to the Fund's Charter and Bylaws and certain action taken by its Board of Directors, among other matters addressed in the certificate. We have examined and relied on such corporate records of the Fund and other documents and certificates as to factual matters as we have deemed necessary to render the opinion expressed herein. We have assumed, without independent verification, the authenticity of all documents submitted to us as originals, the conformity with originals of all documents submitted to us as copies, and the genuineness of all signatures. Based on such examination, we are of the opinion that the Shares of Common Stock to be issued upon exercise of the Rights have been duly authorized and that when the Shares have been sold, issued and paid for as contemplated by the Prospectus, the Shares will be validly and legally issued, fully paid and nonassessable. This letter expresses our opinion with respect to the Maryland General Corporation Law governing matters such as the authorization and issuance of stock. It does not extend to the securities laws or "Blue Sky" laws of Maryland, to federal securities laws or to other laws. You may rely on our foregoing opinion in rendering your opinion to the Fund that is to be filed as an exhibit to the Registration Statement. We consent to the filing of this opinion as an exhibit to the Registration Statement. We do not thereby admit that we are "experts" as that term is used in the Securities Act of l933 and the regulations thereunder. Very truly yours, /s/ Venable, Baetjer and Howard, LLP EX-99.2M 30 ex2-m.txt EXHIBIT 2(M) EXHIBIT (m) CONSENT TO SERVICE OF PROCESS Effective August 2, 1954 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 5-R IRREVOCABLE APPOINTMENT OF AGENT FOR SERVICE OF PROCESS, PLEADINGS AND OTHER PAPERS BY CORPORATION* NON-RESIDENT INVESTMENT ADVISER THIS FORM SHALL BE FILED IN DUPLICATE ORIGINAL 1. The STEWART WEST INDIES TRADING CO., LTD. a corporation incorporated under the laws of Barbados, and having its principal place of business at Bellerive, Queen Street, St. Peter, Barbados, hereby designates and appoints, without power of revocation, the United States Securities and Exchange Commission as the agent of said corporation upon which may be served all process, pleadings, and other papers in any civil suit or action brought against it in any appropriate court in any place subject to the jurisdiction of the United States, where the cause of action (a) accrues on or after August 2, 1954, (b) arises out of activity, in any place subject to the jurisdiction of the United States, occurring in connection with the conduct of business by the corporation as an investment adviser, and (c) is founded, directly or indirectly, upon the provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940, or any rule or regulation under any of said Acts; and 2. Said corporation, STEWART WEST INDIES TRADING COMPANY, LTD. hereby consents, stipulates and agrees, without power of revocation, (a) that any such civil suit or action may be commenced against it by the service of process upon the Commission and the forwarding by the Commission of a copy thereof by registered mail to it at the last address of record filed by it with the Commission, (b) that all service of process, pleadings, or other papers upon the Commission and the forwarding of a copy thereof by registered mail to it at the last address of record filed with the Commission shall be taken and held in all courts to be as valid and binding as if due personal service had been had upon it, and (c) that service upon the Commission may be effected by delivering copies of said process, pleadings or papers to the Secretary of the Commission or to any other person designated by the Commission for such purpose, and the certificate of the Secretary of the Commission or of such other person reciting that said process, pleadings or other papers were received by the Commission and that a copy thereof was forwarded to said corporation at the last address of record filed by it with the Commission shall constitute evidence of such service upon it. IN WITNESS WHEREOF, the President and Secretary of said corporation STEWART WEST INDIES TRADING CO. , LTD. , by the authority and direction of the Board of Directors of said corporation have executed this irrevocable power of attorney, consent, stipulation and agreement for and on behalf of said corporation at Boulder, Colorado this 17th day of May A.D., 1999. Stewart West Indies Trading Co. Ltd /s/ Stephen C. Miller By: /s/ Stephen C. Miller Attest: Stephen C. Miller Stephen C. Miller, (Secretary) Vice President and Chairman Corporate Seal NOTE: The persons executing this irrevocable power of attorney, consent, stipulation and agreement should appear before a person authorized to administer acknowledgments in the jurisdiction in which it is executed and acknowledge that they executed it on behalf of said corporation as its free and voluntary act. The acknowledgment should be in the form prescribed by the law of the jurisdiction in which it is executed. The form of acknowledgment suggested below should be used only if it is consistent with the requirements of the law of such jurisdiction. The failure of any acknowledgment to meet applicable requirements shall not affect the validity or effect of the foregoing irrevocable power of attorney, consent, stipulation and agreement. State of Colorado) County of Boulder) ss: I, STEPHANIE KELLEY, Notary Public in and for (said County in) the State) aforesaid, do hereby certify that STEPHEN C. MILLER (name of President) and STEPHEN C. MILLER (Name of Secretary) personally appeared before me this day, stated that they are respectively the Chairman of the Board and Vice-President and secretary of the STEWART WEST INDIES TRADING COMPANY, LTD. that they are the same persons named in the foregoing instrument as the vice-president and secretary of said corporation, that they have been duly authorized to execute said instrument for the corporation, and that they signed and sealed said instrument for and on behalf of said corporation as its free and voluntary act for the uses and purposes therein set forth. Given under my hand and seal this 17th day of May A.D., 1999. /s/ Stephanie Kelley Notary Public, State of Colorado My commission (or office) expires: 4/28/2002 *This form should be appropriately revised for use by an investment adviser which is an unincorporated organization or association other than a partnership. EX-99.2N 31 ex2-n.txt EXHIBIT 2(N) EXHIBIT (n) CONSENT OF KPMG LLP Consent of Independent Auditors The Board of Directors and Shareholders Boulder Growth & Income Fund, Inc.: We consent to the use of our report, dated July 31, 2002, incorporated by reference with the financial statements of Boulder Growth & Income Fund, Inc. as of and for the year ended June 30, 2002 and to the references to our firm under the headings, "FINANCIAL HIGHLIGHTS" and "OTHER SERVICE PROVIDERS - INDEPENDENT ACCOUNTANTS" in the Prospectus and "FINANCIAL STATEMENTS -INDEPENDENT ACCOUNTANTS" in the Statement of Additional Information. /s/ KPMG LLP Boston, Massachusetts November 18, 2002 EX-99.2P 32 ex2-p.txt EXHIBIT 2(P) EXHIBIT (p) FORM OF LETTER AGREEMENT BETWEEN THE FUND AND USLIFE CORPORATION 125 Maiden Lane New York, NY 10038 212 422 5670 USLIFE CORPORATION December 1, 1972 USLIFE Income Fund, Inc. 125 Maiden Lane New York, New York 10038 Dear Sirs: In connection with the purchase of USLIFE Corporation today of 8,400 shares of Common Stock, par value $1.00 per share (the "Shares", of USLIFE Income Fund, Inc. the undersigned hereby represents and warrants that it is acquiring the Shares for investment and not with a view to any resale or distribution thereof. The undersigned is aware that the Shares must be held indefinitely unless they are subsequently registered under the Securities Act of 1933 or an exemption from such registration is available. The undersigned understands that Rule 144 under the Securities Act of 1933 may provide a limited means of selling the Shares after two years if all the conditions set forth in such Rule are met, but that the possibility of a sale other than in accordance with such Rule and without registration under the Securities Act of 1933 is remote. Very truly yours, USLIFE Corporation /s/ Gordon E. Crosby, Jr. Chairman of the Board Attest: /s/ Anthony J. Stilo Vice President and Secretary EX-99.2R 33 ex2-r.txt EXHIBIT 2(R) EXHIBIT (r) CODE OF ETHICS BOULDER TOTAL RETURN FUND, INC. BOULDER GROWTH & INCOME FUND, INC. BOULDER INVESTMENT ADVISERS, L.L.C. STEWART INVESTMENT ADVISERS AMENDED AND RESTATED CODE OF ETHICS I. Introduction A. General Principles This Code of Ethics ("Code") establishes rules of conduct for "Covered Persons" (as defined herein) of the Boulder Total Return Fund, Inc. ("BTF"), Boulder Growth & Income Fund, Inc. (formerly known as USLIFE Income Fund, Inc.), ("BIF"), and collectively, the "Funds", Boulder Investment Advisers, L.L.C. and Stewart Investment Advisers (each an "Adviser" and together the "Advisers") and is designed to govern the personal securities activities of Covered Persons. In general, in connection with personal securities transactions, Covered Persons should (1) always place the interests of the Funds' shareholders first; (2) ensure that all personal securities transactions are conducted consistent with this Code and in such a manner as to avoid any actual or potential conflict of interest or any abuse of a Covered Person's position of trust and responsibility; and (3) not take inappropriate advantage of their positions. B. Applicability For purposes of this Code, "Covered Person" shall mean: 1. Any officer or employee of the Funds or officer, employee or Director of any Adviser, or of any company in a control relationship to the Funds or any Adviser who, in connection with his or her regular functions or duties, makes, participates in or obtains information regarding the purchase or sale of securities by the Funds or whose functions relate to the making of any recommendation to the Funds regarding the purchase or sale of securities, or any natural person in a control relationship to the Funds or any Adviser who obtains information concerning recommendations made to the Funds with regard to the purchase or sale of a security (collectively, an "Advisory Person"), including the person or persons with the direct responsibility and authority to make investment decisions affecting the Fund (the "Portfolio Manager"); and 2. Any Director of the Funds. This Code shall not apply to any director, officer, or other person if such individual is required to comply with another organization's code of ethics which has been approved by the Board of Directors of the Fund pursuant to Rule 17j-1 under the Investment Company Act of 1940, as amended (the "1940 Act"). [Note: This code does not cover any Principal Underwriter and affiliated persons.] II. Restrictions on Activities A. Blackout Periods 1. No Advisory Person shall purchase or sell, directly or indirectly, any security in which he or she has, or by reason of such transaction acquires, any direct or indirect beneficial ownership (as defined in Attachment A to this Code) on a day during which the Funds have a pending "buy" or "sell" order in that same security until that order is executed or withdrawn. 2. No Portfolio Manager shall purchase or sell, directly or indirectly, any security in which he or she has, or by reason of such transaction acquires, any direct or indirect beneficial ownership (as defined in Attachment A to this Code) within (i) seven (7) calendar days before and one (1) calendar day after the Funds trade in that security with respect to Matching Transactions and (ii) seven (7) calendar days before and seven (7) calendar days after with respect to Non-Matching Transactions. The term "Matching Transaction" shall mean a buy-buy or sell-sell transaction where the Funds purchase and the Portfolio Manager purchases the same security or the Funds sell and the Portfolio Manager sells the same security. The term "Non-Matching Transaction" shall mean a buy-sell or sell-buy transaction where the Funds purchase and the Portfolio Manager sells the same security, or the Funds sell and the Portfolio Manager purchases the same security. B. Interested Transactions No Covered Person shall recommend any securities transactions by the Funds without having disclosed his or her interest, if any, in such securities or the issuer thereof, including without limitation: a. any direct or indirect beneficial ownership (as defined in Attachment A to this Code) of any securities of such issuer; b. any contemplated transaction by such person in such securities; c. any position with such issuer or its affiliates; and d. any present or proposed business relationship between such issuer or its affiliates and such person or any party in which such person has a significant interest. C. Initial Public Offerings No Advisory Person shall acquire, directly or indirectly, beneficial ownership of any securities in an initial public offering without the prior approval of the Designated Supervisory Person (as hereinafter defined). Prior to granting any such approval, the Designated Supervisory Person will carefully review information provided by such Advisory Person on a Preclearance Approval Form (see Exhibit B) containing full details of the proposed transaction. The Designated Supervisory Person shall take into consideration, among other factors, whether the investment opportunity should be reserved for the Funds and their respective shareholders, whether the opportunity is being offered to the Advisory Person as a reward for prior business, or otherwise by virtue of his or her position with the Funds, and whether it would be reasonable to expect that the Advisory Person's future investment decisions for the Funds will continue to be based solely on the best interest of the Funds' respective shareholders. Purchases of initial public offerings of volatile securities which are difficult to obtain, such as certain common stocks, will ordinarily not be approved. In contrast, purchases of generally available initial public offerings of less volatile securities such as municipal bonds in which the Funds do not customarily invest would usually be approved. D. Private Placements No Advisory Person shall acquire, directly or indirectly, beneficial ownership of any securities in a private placement without the prior approval of the Designated Supervisory Person. Prior to granting any such approval, the Designated Supervisory Person will carefully review information provided by such Advisory Person on a Preclearance Approval Form (see Exhibit B) containing full details of the proposed transaction. The Designated Supervisory Person shall take into consideration, among other factors, whether the investment opportunity should be reserved for the Fund and its shareholders, whether the opportunity is being offered to the Advisory Person as a reward for prior business, or otherwise by virtue of his or her position with the Funds, and whether it would be reasonable to expect that the Advisory Person's future investment decisions for the Funds will continue to be based solely on the best interest of the Funds' respective shareholders. Advisory Persons who have acquired securities in a private placement shall disclose that investment (i) when they play a part in the Funds' subsequent consideration of an investment in the issuer, or (ii) otherwise prior to any investment by the Funds when such Advisory Person knows or should know of the Funds' planned investment. In such circumstances, the Funds' decision to purchase securities of the issuer will be subject to an independent review by Advisory Persons with no personal interest in the issuer. E. Gifts No Advisory Person shall receive any gift or other things of more than de minimis value i.e., totaling $250 in any 12-month period, from any person or entity that does business with or on behalf of the Funds, other than reasonable business-related meals or tickets to sporting events, theater or similar activities. F. Service as a Director No Advisory Person shall serve on the board of directors of any publicly traded company without prior authorization from a committee comprised of the Designated Supervisory Person and any one non-interested director (the "Compliance Committee") based upon a determination that such board service would be consistent with the interests of the Funds and their respective shareholders. If such service is authorized, the Advisory Person will be isolated from making investment decisions relating to such service through the implementation of appropriate "Chinese Wall" procedures established by the Compliance Committee. III. Exempt Transactions A. For purposes of this Code, the term "security" shall not include the following: 1. securities issued or guaranteed as to principal or interest by the Government of the United States or its instrumentalities; 2. bankers' acceptances; 3. bank certificates of deposit; 4. commercial paper and similar high quality short-term debt instruments, including repurchase agreements; and 5. shares of registered open-end investment companies. "Security" shall include options, futures contracts as well as "related securities," such as convertible securities and warrants. B. The prohibitions described in paragraph (A) of Article II shall not apply to: 1. Purchases or sales effected in any account over which the Covered Person has no direct or indirect influence or control; 2. Purchases or sales that are non-volitional on the part of the Covered Person; 3. Purchases that are part of an automatic dividend reinvestment plan; 4. Purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from the issuer, and sales of such rights so acquired; or 5. Subject to the advance approval by a Designated Supervisory Person (as defined below) purchases or sales which are only remotely potentially harmful to the Fund because such purchases or sales would be unlikely to affect a highly institutional market, or because such purchases or sales are clearly not related economically to the securities held, purchased or sold by the Fund. IV. Compliance Procedures A. 1. Preclearance - Generally Subject to paragraphs B (Reporting) and D (Certification of Compliance) below, a Covered Person may directly or indirectly acquire or dispose of beneficial ownership of a security (collectively referred to herein as a "Transaction"), including shares of the Funds, only if (1) such Transaction has been approved by the Supervisory Person designated by the Board of Directors of the Funds or, in the case of any other supervisory person employed by an Adviser, by such Adviser and approved by the Board of Directors of the Funds (the "Designated Supervisory Person"), (2) the approved Transaction is completed within a thirty (30) day period (or in the case of a Transaction in shares of the Funds, a seven (7) day period) after such approval is received and (3) the Designated Supervisory Person has not rescinded such approval prior to execution of the Transaction. The term "Covered Person" applies to the Adviser, the Sub-Adviser, those persons identified in "Schedule ___", attached hereto and their immediate family members or "significant others", and all Horejsi Affiliates, as defined in the Policies and Procedures Manual of the Fund. 2. Rescission of Transaction. Notwithstanding a Covered Person's receiving the foregoing prior approval of a Transaction, such Covered Person may nonetheless be required to rescind any Transaction in any security in which the Funds have made a trade, if the Covered Person's Transaction is not effected within 48 hours of the pre-clearance and it occurs within seven (7) calendar days of the Funds' transaction in the same security or a related security. Such rescission may be required whether or not notice of the Funds' purchase or sale was given to the Covered Person. 3. Blanket Preclearances. The Designated Supervisory Person may from time to time issue blanket pre-clearances to any and all Covered Persons for specific securities or limited classes of securities if the stated policy of the Funds is to avoid such specific securities or limited classes of securities because they are inappropriate investments given the stated investment philosophy of the respective Fund (e.g., specific high-tech or dot-com stocks, common stock, including RICs and REITs, having a market-cap of less than $100 million, and/or RICs and REITs after the Fund has completed its buying program in such securities). Notwithstanding the grant of a blanket pre-clearance, such pre-clearance may be rescinded at any time by the Designated Supervisory Person and any Transactions with respect to a security that is the subject of a blanket pre-clearance may be subject to rescission under circumstances contemplated in paragraph (2) above (i.e., if a Transaction in the pre-cleared security occurs within 7 days of a transaction in the same security or a related security by the Funds). Transactions for which pre-clearance has been given under Sections 1 and 3 above remain subject to the reporting requirements of this Code. Neither the Funds, nor the Supervisory Person shall be responsible for any loss or expense or other adverse consequences arising from a rescission of a Transaction for which pre-clearance had been given; and any gains on a rescinded Transaction shall be donated to a charity selected by the Adviser. 4. "De Minimus" Transactions. The pre-clearance requirements of this Code shall not apply to "de minimus" transactions, defined as any purchase or sale of a security by an Access Person who is not also buying or selling the same security or a related security for the Funds, and which: a. Is issued by a company with a market capitalization of at least $1 billion and has an average daily trading volume of at least 100,000 shares; and b. Involves no more than 100 shares or units, regardless of the dollar amount of the transaction, or any number of shares or units having a value of no more than $5,000. If, during any two consecutive calendar quarters, aggregate purchase or sale transactions by the Access Person in shares or units of the same issuer exceed 300 shares or units or a cumulative purchase value of $15,000, whichever is the last to occur, subsequent transactions in the issuer's securities shall no longer be regarded as "de minimus" transactions. Within three business days of the transaction which causes a limit of 300 shares or units or $15,000 to be exceeded, the Access Person shall notify the Designated Supervisory Person of the occurrence of the transaction. Transactions in the applicable issuer's securities during the next 12 months will be subject to the pre-clearance provisions of this Code. De minimus transactions remain subject to all provisions of this Code other than the pre-clearance requirements. In order to facilitate the foregoing preclearance procedures: 1. A Trading Approval Form, attached as Exhibit A, must be completed and submitted to the Designated Supervisory Person prior to any decision to approve a transaction. 2. After reviewing the proposed trade and the level of potential investment interest on behalf of the Funds in the security in question, and the Funds' restricted lists, if any, the Designated Supervisory Person shall approve (or disapprove) a trading order as expeditiously as possible. The Designated Supervisory Person will generally approve transactions described below unless the security in question or a related security is on the Restricted List or the Designated Supervisory Person believes for any other reason that the Covered Person should not trade in such security at such time: a. Non-convertible fixed income securities rated at least "A"; b. Equity Securities of a class having a market capitalization in excess of $5 billion if the transaction in question and the aggregate amount of such Securities and any related Securities purchased and sold for the Covered Person in question during the preceding 60 days does not exceed (x) $10,000 or (y) 100 shares or (z) 1% of the trading volume in the shares over the previous 4 calendar weeks; and c. Municipal Securities. 3. In the absence of the Designated Supervisory Person, a Covered Person may submit his or her Trading Approval Form to a designee of the Designated Supervisory Person if the Designated Supervisory Person in his sole discretion wishes to appoint one. Trading approval for the Designated Supervisory Person must be obtained from a designated supervisory person for the Designated Supervisory Person. 4. In rendering approvals, the Designated Supervisory Person shall consider information contained in previously submitted Trading Approval Forms and any initial, quarterly and annual disclosure certifications previously submitted by the Covered Person, in order to generally consider that person's trading activities with a view to ensuring that all Covered Persons are complying with the spirit as well as the detailed requirements of this Code. B. Reporting 1. Initial Holdings Reports. No later than 10 calendar days after the person becomes a Covered Person, the following information shall be submitted by each Covered Person to the Designated Compliance Person in an Initial Holdings Report in the form set forth as Exhibit C: a. The title, number of shares and principal amount of each Covered Security in which the Covered Person had any direct or indirect beneficial ownership when the person became a Covered Person; b. The name of any broker, dealer or bank with whom the Covered Person maintained an account in which any securities were held for the direct or indirect benefit of the Covered Person as of the date the person became a Covered Person; and c. The date that the report is submitted by the Covered Person 2. Quarterly Transaction Reports. Every Covered Person must make a quarterly transaction report covering each non-exempt transaction by which the Covered Person acquires any direct or indirect beneficial ownership (as defined in Exhibit A to this Code) of a security, provided, however, that a Covered Person shall not be required to make a report with respect to any transaction effected for any account over which such person does not have any direct or indirect influence or control or which would duplicate information recorded pursuant to Rules 204-2(a)(12) or 204-2(a)(13) under the Investment Advisers Act of 1940, as amended. A Covered Person must submit the quarterly transaction report (see Exhibit D) to the Designated Supervisory Person no later than 10 days after the end of the calendar quarter in which the transaction to which the report relates was effected. Each report must contain the following information: a. The date of the transaction, the title, the interest rate and maturity date (if applicable) and the number of shares, and the principal amount of each security involved: b. The nature of the transaction (i.e., purchase, sale or other acquisition or disposition); c. The price at which the transaction was effected; d. The name of the broker, dealer or bank with or through whom the transaction was effected; and e. The date that the report is submitted. With respect to any account established by a Covered Person during the quarter for the direct or indirect benefit of the Covered Person, the Covered Person shall report: 1. The name of the broker, dealer or bank with whom the Covered Person established the account; 2. The date the account was established; and 3. The date that the report is submitted by the Covered Person. Any broker or futures commission merchant through which a transaction is effected shall be directed by the Covered Person to supply to the Designated Supervisory Person, on a timely basis, duplicate confirmations and monthly brokerage statements for all securities accounts. 3. Annual Holdings Reports. Annually, the following information (which information must be current as of a date no more than 30 calendar days before the report is submitted): a. The title, number of shares and principal amount of each Security in which the Covered Person had any direct or indirect beneficial ownership; b. The name of any broker, dealer or bank with whom the Covered Person maintains an account in which any securities are held for the direct or indirect benefit of the Covered Person; and c. The date that the report is submitted by the Covered Person. 4. Disclaiming Beneficial Ownership. Any report submitted to comply with the requirements of this Section IV.B. may contain a statement that the report shall not be construed as an admission by the person making such report that such person has any direct or indirect beneficial ownership (as defined in Exhibit A) in the securities to which the report relates. C. Non-Interested Directors and Covered Persons Not Affiliated with any of the Funds' Investment Advisers 1. Any person who is a Covered Person by virtue of being (i) a Director of the Funds, but who is not an "interested person" (as defined in the 1940 Act) of the Funds (an "Independent Director") shall be required to comply with Sections IV.A. (Preclearance) and Section IV.B.2. (Quarterly Transaction Reports) above, or (ii) an officer of the Funds, but is not an Advisory Person and is not an affiliate of any Adviser, shall be required to comply with Section IV.A. (Preclearance) above, with respect to a transaction only if such person, at the time of that transaction, knew, or in the ordinary course of fulfilling his or her official duties should have known, that during the 15-day period immediately preceding the date of the transaction by such person, the security such person purchased or sold is or was purchased or sold by the Funds or was being considered for purchase or sale by the Funds. In addition, Independent Directors are not required to submit the Initial Holdings Reports and Annual Holdings Reports required by Sections IV.B.1 and 3 above. 2. Notwithstanding Section IV.C.1 above, any Independent Director shall be required to comply with Section IV.A. (Preclearance) above, with respect to all purchases or sales of the Funds' shares at all times. D. Certification of Compliance Each Covered Person is required to certify annually that he or she has read and understood the Fund's' Code and recognizes that he or she is subject to such Code. Further, each Covered Person is required to certify annually that he or she has complied with all the requirements of the Code and that he or she has disclosed or reported all personal securities transactions required to be disclosed or reported pursuant to the requirements of the Code. E. Review by the Board of Directors No less frequently than annually, the Fund and each Adviser must furnish to the Funds' Board of Directors, and the Board of Directors must consider, a written report that: 1. Describes any issues arising under the Code or procedures since the last report to the Funds' Board of Directors, including, but not limited to, information about material violations of the Code or procedures and sanctions imposed in response to the material violations; and 2. Certifies that the Funds and each Adviser have adopted procedures reasonably necessary to prevent Covered Persons from violating the Code. The Board of Directors of the Funds, including a majority of Independent Directors, must approve any material changes to the Code no later than six months after adoption of the material change. The Board must base its approval of any material changes to the Code on a determination that the Code contains provisions reasonably necessary to prevent Covered Persons from engaging in any conduct prohibited under Rule 17j-1 under the 1940 Act and the Code. Before approving any amendment to the Code, the Board must receive a certification from each Fund and each Adviser that it has adopted procedures reasonably necessary to prevent Covered Persons from violating the Code. V. Sanctions Upon discovering that a Covered Person has not complied with the requirements of this Code, the Designated Supervisory Person shall submit findings to the Board of Directors, or any Compliance Committee. The Board or Compliance Committee may impose on that Covered Person whatever sanctions it deems appropriate, including, among other things, disgorgement of profits, censure, suspension or termination of employment. Any significant sanction imposed shall be reported to the Board of Directors in accordance with Section IV.E. above. VI. Confidentiality All information obtained from any Covered Person hereunder shall be kept in strict confidence, except that reports of securities transactions hereunder may be made available to the Securities and Exchange Commission or any other regulatory or self-regulatory organization, and may otherwise be disclosed to the extent required by law or regulation. VII. Other Laws, Rules and Statements of Policy Nothing contained in this Code shall be interpreted as relieving any Covered Person from acting in accordance with the provision of any applicable law, rule, or regulation or any other statement of policy or procedures governing the conduct of such person adopted by the Funds. VIII. Further Information If any person has any questions with regard to the applicability of the provisions of this Code generally or with regard to any securities transaction or transactions such person should consult the Designated Supervisory Person. IX. Records The Funds and each Adviser must maintain the following records: 1. A copy of each Code of Ethics for the organization that is in effect, or any time within the past five years was in effect, must be maintained in an easily accessible place. 2. A record of any violation of the Code, and of any action taken as a result of the violation, must be maintained in an easily accessible place for at least five years after the end of the fiscal years in which the violation occurs. 3. A copy of each report made by a Covered Person as required by the Code, including any information provided in lieu of the quarterly reports, must be maintained for at least five years after the end of the fiscal year in which the report is made or the information is provided, the first two years in an easily accessible place. 4. A record of all persons, currently or within the past five years, who are or were required to make reports, or who were responsible for reviewing these reports, must be maintained in an easily accessible place. 5. A copy of each annual report to the Board of Directors must be maintained for at least five years after the end of the fiscal year in which it is made, the first two years in an easily accessible place. 6. The Funds or an Advisor, as applicable, must maintain a record of any decision, and the reasons supporting the decision, to approve the acquisition by a Covered Person of IPOs or private placements, for at least five years after the end of the fiscal year in which the approval is granted. Originally dated: January 20, 1995 Approved as amended: January 23, 1998 Approved as amended: January 15, 1999 Approved as amended: June 23, 2000 Approved as amended: January 23, 2002 Approved as amended: October 14, 2002 Exhibit A The term "beneficial ownership" as used in the attached Code of Ethics (the "Code") is to be interpreted by reference to Rule 16a-1(a)(2) under the Securities Exchange Act of 1934 (the "Rule"), except that the determination of direct or indirect beneficial ownership for purposes of the Code must be made with respect to all securities that a Covered Person has or acquires. Under the Rule, a person is generally deemed to have beneficial ownership of securities if the person, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares a direct or indirect pecuniary interest in the securities. The term "pecuniary interest" in particular securities is generally defined in the Rule to mean the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in the securities. A person is refutably deemed to have an "indirect pecuniary interest" within the meaning of the Rule in any securities held by members of the person's immediate family sharing the same household, the term "immediate family" including any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, as well as adoptive relationships. Under the Rule, an indirect pecuniary interest also includes, among other things: a general partner's proportionate interest in the portfolio securities held by a general or limited partnership; a performance-related fee, other than an asset-based fee, received by any broker, dealer, bank, insurance company, investment company, investment adviser, investment manager, trustee or person or entity performing a similar function; a person's right to dividends that is separated or separable from the underlying securities; a person's interest in securities held by certain trusts; and a person's right to acquire equity securities through the exercise or conversion of any derivative security, whether or not presently exercisable, the term "derivative security" being generally defined as any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege at a price related to an equity security, or similar securities with, or value derived from, the value of an equity security. For purposes of the Rule, a person who is a shareholder of a corporation or similar entity is not deemed to have a pecuniary interest in portfolio securities held by the corporation or entity, so long as the shareholder is not a controlling shareholder of the corporation or the entity and does not have or share investment control over the corporation's or the entity portfolio. Exhibit B BOULDER TOTAL RETURN FUND, INC. BOULDER GROWTH & INCOME FUND, INC. PRE-CLEARANCE TRADING APPROVAL FORM I, ___________________________________________________ (name), am a Covered Person and seek Preclearance to engage in the transaction described below: Acquisition or Disposition (circle one) Name of Account: ------------------------------------ Account Number: ------------------------------------ Date of Request: ------------------------------------ Security: ------------------------------------------- Amount or # of Shares: ----------------------------- Broker: -------------------------------------------- If the transaction involves a Security that is not publicly traded, a description of proposed transaction, source of investment opportunity and any potential conflicts of interest: I hereby certify that, to the best of my knowledge, the transaction described herein is not prohibited by the Funds' Code of Ethics dated June 23, 2000 and that the opportunity to engage in the transaction did not arise by virtue of my activities on behalf of any Client. Signature: ----------------------------------------- Print Name: ---------------------------------------- Approved or Disapproved (Circle One) Date of Approval: Signature: ----------------------------------------- Print Name: ---------------------------------------- If approval is granted, please forward this form to the trading desk (or if a third party broker is permitted, to the Designated Supervisory Person) for immediate execution. Exhibit C BOULDER TOTAL RETURN FUND, INC. BOULDER GROWTH & INCOME FUND, INC. INITIAL HOLDINGS REPORT Report Submitted by: ------------------------------------------------------------ Print Your Name The following table supplies the information required by Section IV(B) of the Code of Ethics dated June 23, 2000 for the period specified below.
Name of the Broker/Dealer Nature of Securities (Name and Quantity of Price Per Share or with or through whom the Ownership of Symbol) Securities Other Unit Securities are Held Securities - ------- ----------- ------------------ ------------------------- ------------
To the extent specified above, I hereby disclaim beneficial ownership of any security listed in this Report or in brokerage statements or transaction confirmations provided by you. - -------------------------------------------------------------------------------- I CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT TO THE BEST OF MY KNOWLEDGE THE INFORMATION FURNISHED IN THIS REPORT IS TRUE AND CORRECT FOR THE PERIOD OF __________, _____ THROUGH ____________, _____. Signature: ------------------------- Position: ------------------------- Date: ------------------------- Exhibit D BOULDER TOTAL RETURN FUND, INC. BOULDER GROWTH & INCOME FUND, INC. QUARTERLY TRANSACTION REPORT Report Submitted by: ------------------------------------------------------------ Print Your Name This transaction report (the "Report") is submitted pursuant to Section IV(B) of the Code of Ethics of the Fund and supplies information with respect to transactions in any Security in which you may be deemed to have, or by reason of such transaction acquire, any direct or indirect beneficial ownership interest for the period specified below. If you were not employed by us during this entire period, amend the dates specified below to cover your period of employment. Unless the context otherwise requires, all terms used in the Report shall have the same meaning as set forth in the Code of Ethics dated June 23, 2000. If you have no reportable transactions, sign and return this page only. If you have reportable transactions, complete, sign and return page 2 and any attachments. - -------------------------------------------------------------------------------- I HAD NO REPORTABLE SECURITIES TRANSACTIONS DURING THE PERIOD __________, 2000 THROUGH _________, _______. I CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT TO THE BEST OF MY KNOWLEDGE THE INFORMATION FURNISHED IN THIS REPORT IS TRUE AND CORRECT. Signature: ------------------------- Position: ------------------------- Date: ------------------------- Page 2 BOULDER TOTAL RETURN FUND, INC. BOULDER GROWTH & INCOME FUND, INC. QUARTERLY TRANSACTION REPORT Report Submitted by: ------------------------------------------------------------ Print Your Name The following table supplies the information required by Section IV(C) of the Code of Ethics dated June 23, 2000 for the period specified below. Transactions reported on brokerage statements or duplicate confirmations actually received by the Designated Supervisory Person do not have to be listed although it is your responsibility to make sure that such statements or confirmations are complete and have been received in a timely fashion.
Name of the Whether Purchase, Broker/Dealer Sale, Short Sale, with or through Securities or Other Type of whom the Nature of (Name and Date of Disposition or Quantity of Price Per Share or Transaction Was Ownership of Symbol) Transaction Acquisition Securities Other Unit Effected Securities - ------- ----------- ----------------- ----------- ------------------ --------------- ------------
To the extent specified above, I hereby disclaim beneficial ownership of any security listed in this Report or in brokerage statements or transaction confirmations provided by you. - -------------------------------------------------------------------------------- I CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT TO THE BEST OF MY KNOWLEDGE THE INFORMATION FURNISHED IN THIS REPORT IS TRUE AND CORRECT FOR THE PERIOD OF _________, ____ THROUGH ___________, _____. Signature: ------------------------- Position: ------------------------- Date: ------------------------- Exhibit E BOULDER TOTAL RETURN FUND, INC. BOULDER GROWTH & INCOME FUND, INC. ANNUAL HOLDINGS REPORT Report Submitted by: ------------------------------------------------------------ Print Your Name The following table supplies the information required by Section IV(B) of the Code of Ethics dated June 23, 2000 for the period specified below.
Name of the Broker/Dealer Nature of Securities (Name and Quantity of Price Per Share or with or through whom the Ownership of Symbol) Securities Other Unit Transaction was Effected Securities - ------- ----------- ------------------ ------------------------- ------------
To the extent specified above, I hereby disclaim beneficial ownership of any security listed in this Report or in brokerage statements or transaction confirmations provided by you. - -------------------------------------------------------------------------------- I CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT TO THE BEST OF MY KNOWLEDGE THE INFORMATION FURNISHED IN THIS REPORT IS TRUE AND CORRECT FOR THE PERIOD OF __________, ____ THROUGH ____________, _____. Signature: ------------------------- Position: ------------------------- Date: ------------------------- Exhibit F BOULDER TOTAL RETURN FUND, INC. BOULDER GROWTH & INCOME FUND, INC. ANNUAL CERTIFICATION OF CODE OF ETHICS I (a Covered Person) hereby certify that I have read and understood the Code of Ethics of Boulder Total Return Fund, Inc. dated June 23, 2000 and recognize that I am subject to its provisions. In addition, I hereby certify that I have complied with the requirements of the Code of Ethics and that I have disclosed or reported all personal Securities transactions required to be disclosed or reported under the Code of Ethics. Signature: ------------------------- Position: ------------------------- Date: ------------------------- EX-99 34 ex2-s.txt EXHIBIT 2(S) EXHIBIT (s) POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL PEOPLE BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Stephen C. Miller and Carl D. Johns, and each and any of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and his name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to the Registration Statement for the Boulder Growth & Income Fund, Inc. on Form N-2, and to sign any registration statement that is to be effective upon filing pursuant to Rule 462 promulgated under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done; hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date - ----------------------- ------------------------------ ---------------- /s/ Stephen C. Miller Director, Chief Executive October 18, 2002 Officer, President and Stephen C. Miller Chairman of the Board /s/ Susan L. Ciciora Director October 18, 2002 Susan L. Ciciora /s/ Joel W. Looney Director October 18, 2002 Joel W. Looney /s/ Alfred G. Aldridge Director October 18, 2002 Alfred G. Aldridge, Jr. /s/ Richard I. Barr Director October 18, 2002 Richard I. Barr /s/ Carl D. Johns Chief Financial Officer, Chief October 18, 2002 Accounting Officer, Vice Carl D. Johns President and Treasurer -----END PRIVACY-ENHANCED MESSAGE-----